Correlation Between Southwest Airlines and Public Storage
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Public Storage 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 Public Storage 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 Public Storage, you can compare the effects of market volatilities on Southwest Airlines and Public Storage 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 Public Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Public Storage.
Diversification Opportunities for Southwest Airlines and Public Storage
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southwest and Public is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and Public Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Storage 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 Public Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Storage has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Public Storage go up and down completely randomly.
Pair Corralation between Southwest Airlines and Public Storage
Assuming the 90 days horizon Southwest Airlines Co is expected to generate 1.14 times more return on investment than Public Storage. However, Southwest Airlines is 1.14 times more volatile than Public Storage. It trades about 0.14 of its potential returns per unit of risk. Public Storage is currently generating about -0.08 per unit of risk. If you would invest 2,767 in Southwest Airlines Co on October 14, 2024 and sell it today you would earn a total of 406.00 from holding Southwest Airlines Co or generate 14.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines Co vs. Public Storage
Performance |
| Timeline |
| Southwest Airlines |
| Public Storage |
Southwest Airlines and Public Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Public Storage
The main advantage of trading using opposite Southwest Airlines and Public Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Public Storage 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 Public Storage will offset losses from the drop in Public Storage's long position.| Southwest Airlines vs. JIAHUA STORES | Southwest Airlines vs. Highlight Communications AG | Southwest Airlines vs. Retail Estates NV | Southwest Airlines vs. Burlington Stores |
| Public Storage vs. Fair Isaac Corp | Public Storage vs. Alaska Air Group | Public Storage vs. Ryanair Holdings plc | Public Storage 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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