Correlation Between Southwest Airlines and Blackstone
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Blackstone 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 Blackstone 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 Blackstone Group, you can compare the effects of market volatilities on Southwest Airlines and Blackstone 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 Blackstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Blackstone.
Diversification Opportunities for Southwest Airlines and Blackstone
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southwest and Blackstone is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group 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 Blackstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Group has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Blackstone go up and down completely randomly.
Pair Corralation between Southwest Airlines and Blackstone
Assuming the 90 days horizon Southwest Airlines Co is expected to under-perform the Blackstone. But the stock apears to be less risky and, when comparing its historical volatility, Southwest Airlines Co is 1.37 times less risky than Blackstone. The stock trades about -0.24 of its potential returns per unit of risk. The Blackstone Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 16,800 in Blackstone Group on November 8, 2024 and sell it today you would lose (370.00) from holding Blackstone Group or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines Co vs. Blackstone Group
Performance |
| Timeline |
| Southwest Airlines |
| Blackstone Group |
Southwest Airlines and Blackstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Blackstone
The main advantage of trading using opposite Southwest Airlines and Blackstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Blackstone 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 Blackstone will offset losses from the drop in Blackstone's long position.| Southwest Airlines vs. FAST RETAIL ADR | Southwest Airlines vs. H2O Retailing | Southwest Airlines vs. Retail Estates NV | Southwest Airlines vs. COSTCO WHOLESALE CDR |
| Blackstone vs. COLUMBIA SPORTSWEAR | Blackstone vs. Elmos Semiconductor SE | Blackstone vs. Treasury Wine Estates | Blackstone vs. TOREX SEMICONDUCTOR LTD |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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