Correlation Between Southwest Airlines and EIDESVIK OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK, you can compare the effects of market volatilities on Southwest Airlines and EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and EIDESVIK OFFSHORE.
Diversification Opportunities for Southwest Airlines and EIDESVIK OFFSHORE
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Southwest and EIDESVIK is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and EIDESVIK OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EIDESVIK OFFSHORE has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and EIDESVIK OFFSHORE go up and down completely randomly.
Pair Corralation between Southwest Airlines and EIDESVIK OFFSHORE
Assuming the 90 days horizon Southwest Airlines Co is expected to generate 0.64 times more return on investment than EIDESVIK OFFSHORE. However, Southwest Airlines Co is 1.55 times less risky than EIDESVIK OFFSHORE. It trades about 0.09 of its potential returns per unit of risk. EIDESVIK OFFSHORE NK is currently generating about 0.0 per unit of risk. If you would invest 2,421 in Southwest Airlines Co on August 26, 2024 and sell it today you would earn a total of 605.00 from holding Southwest Airlines Co or generate 24.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines Co vs. EIDESVIK OFFSHORE NK
Performance |
| Timeline |
| Southwest Airlines |
| EIDESVIK OFFSHORE |
Southwest Airlines and EIDESVIK OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and EIDESVIK OFFSHORE
The main advantage of trading using opposite Southwest Airlines and EIDESVIK OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE will offset losses from the drop in EIDESVIK OFFSHORE's long position.The idea behind Southwest Airlines Co and EIDESVIK OFFSHORE NK pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| EIDESVIK OFFSHORE vs. United Insurance Holdings | EIDESVIK OFFSHORE vs. InPlay Oil Corp | EIDESVIK OFFSHORE vs. ARISTOCRAT LEISURE | EIDESVIK OFFSHORE vs. MSAD INSURANCE |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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