Correlation Between Southwest Airlines and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Perseus Mining 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 Perseus Mining 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 Perseus Mining Limited, you can compare the effects of market volatilities on Southwest Airlines and Perseus Mining 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 Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Perseus Mining.
Diversification Opportunities for Southwest Airlines and Perseus Mining
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Southwest and Perseus is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Perseus Mining go up and down completely randomly.
Pair Corralation between Southwest Airlines and Perseus Mining
Assuming the 90 days horizon Southwest Airlines is expected to generate 1.3 times less return on investment than Perseus Mining. But when comparing it to its historical volatility, Southwest Airlines Co is 1.4 times less risky than Perseus Mining. It trades about 0.21 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 155.00 in Perseus Mining Limited on September 12, 2024 and sell it today you would earn a total of 15.00 from holding Perseus Mining Limited or generate 9.68% 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. Perseus Mining Limited
Performance |
| Timeline |
| Southwest Airlines |
| Perseus Mining |
Southwest Airlines and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Perseus Mining
The main advantage of trading using opposite Southwest Airlines and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Perseus Mining 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 Perseus Mining will offset losses from the drop in Perseus Mining's long position.| Southwest Airlines vs. RYANAIR HLDGS ADR | Southwest Airlines vs. Ryanair Holdings plc | Southwest Airlines vs. Superior Plus Corp | Southwest Airlines vs. SIVERS SEMICONDUCTORS AB |
| Perseus Mining vs. Vastned Retail NV | Perseus Mining vs. MARKET VECTR RETAIL | Perseus Mining vs. Carsales | Perseus Mining vs. QURATE RETAIL INC |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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