Correlation Between Southwest Airlines and WIMFARM SA
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and WIMFARM SA 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 WIMFARM SA 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 WIMFARM SA EO, you can compare the effects of market volatilities on Southwest Airlines and WIMFARM SA 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 WIMFARM SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and WIMFARM SA.
Diversification Opportunities for Southwest Airlines and WIMFARM SA
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Southwest and WIMFARM is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and WIMFARM SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIMFARM SA EO 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 WIMFARM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIMFARM SA EO has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and WIMFARM SA go up and down completely randomly.
Pair Corralation between Southwest Airlines and WIMFARM SA
Assuming the 90 days horizon Southwest Airlines Co is expected to under-perform the WIMFARM SA. But the stock apears to be less risky and, when comparing its historical volatility, Southwest Airlines Co is 5.47 times less risky than WIMFARM SA. The stock trades about -0.09 of its potential returns per unit of risk. The WIMFARM SA EO is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 315.00 in WIMFARM SA EO on October 23, 2024 and sell it today you would earn a total of 65.00 from holding WIMFARM SA EO or generate 20.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines Co vs. WIMFARM SA EO
Performance |
| Timeline |
| Southwest Airlines |
| WIMFARM SA EO |
Southwest Airlines and WIMFARM SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and WIMFARM SA
The main advantage of trading using opposite Southwest Airlines and WIMFARM SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, WIMFARM SA 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 WIMFARM SA will offset losses from the drop in WIMFARM SA's long position.| Southwest Airlines vs. ANTA SPORTS PRODUCT | Southwest Airlines vs. Digilife Technologies Limited | Southwest Airlines vs. Easy Software AG | Southwest Airlines vs. Playtech plc |
| WIMFARM SA vs. TITAN MACHINERY | WIMFARM SA vs. ELECTRONIC ARTS | WIMFARM SA vs. PRECISION DRILLING P | WIMFARM SA vs. Granite Construction |
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 Stocks Directory module to find actively traded stocks across global markets.
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