Correlation Between Southwest Airlines and Collins Foods
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Collins Foods at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Southwest Airlines and Collins Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines Co and Collins Foods Limited, you can compare the effects of market volatilities on Southwest Airlines and Collins Foods and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Southwest Airlines with a short position of Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Collins Foods.
Diversification Opportunities for Southwest Airlines and Collins Foods
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Southwest and Collins is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and Collins Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods Limited and Southwest Airlines is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Southwest Airlines Co are associated (or correlated) with Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods Limited has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Collins Foods go up and down completely randomly.
Pair Corralation between Southwest Airlines and Collins Foods
Assuming the 90 days horizon Southwest Airlines is expected to generate 1.03 times less return on investment than Collins Foods. In addition to that, Southwest Airlines is 1.11 times more volatile than Collins Foods Limited. It trades about 0.22 of its total potential returns per unit of risk. Collins Foods Limited is currently generating about 0.25 per unit of volatility. If you would invest 486.00 in Collins Foods Limited on September 2, 2024 and sell it today you would earn a total of 44.00 from holding Collins Foods Limited or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines Co vs. Collins Foods Limited
Performance |
| Timeline |
| Southwest Airlines |
| Collins Foods Limited |
Southwest Airlines and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Collins Foods
The main advantage of trading using opposite Southwest Airlines and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Collins Foods can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Collins Foods will offset losses from the drop in Collins Foods' long position.| Southwest Airlines vs. Superior Plus Corp | Southwest Airlines vs. NMI Holdings | Southwest Airlines vs. Origin Agritech | Southwest Airlines vs. SIVERS SEMICONDUCTORS AB |
| Collins Foods vs. Highlight Communications AG | Collins Foods vs. PRECISION DRILLING P | Collins Foods vs. International Consolidated Airlines | Collins Foods vs. Southwest Airlines Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |