Correlation Between Southwest Airlines and Shionogi
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Shionogi 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 Shionogi 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 Shionogi Co, you can compare the effects of market volatilities on Southwest Airlines and Shionogi 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 Shionogi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Shionogi.
Diversification Opportunities for Southwest Airlines and Shionogi
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Southwest and Shionogi is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi 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 Shionogi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shionogi has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Shionogi go up and down completely randomly.
Pair Corralation between Southwest Airlines and Shionogi
Assuming the 90 days horizon Southwest Airlines Co is expected to under-perform the Shionogi. But the stock apears to be less risky and, when comparing its historical volatility, Southwest Airlines Co is 1.08 times less risky than Shionogi. The stock trades about -0.21 of its potential returns per unit of risk. The Shionogi Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,240 in Shionogi Co on November 4, 2024 and sell it today you would earn a total of 120.00 from holding Shionogi Co or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southwest Airlines Co vs. Shionogi Co
Performance |
| Timeline |
| Southwest Airlines |
| Shionogi |
Southwest Airlines and Shionogi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Shionogi
The main advantage of trading using opposite Southwest Airlines and Shionogi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Shionogi 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 Shionogi will offset losses from the drop in Shionogi's long position.| Southwest Airlines vs. Cleanaway Waste Management | Southwest Airlines vs. Grupo Carso SAB | Southwest Airlines vs. Benchmark Electronics | Southwest Airlines vs. STMICROELECTRONICS |
| Shionogi vs. CONTAGIOUS GAMING INC | Shionogi vs. Osisko Metals | Shionogi vs. DETALION GAMES SA | Shionogi vs. FIREWEED METALS P |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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