Correlation Between Southwest Airlines and Singapore Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Singapore Telecommunicatio 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 Singapore Telecommunicatio 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 Singapore Telecommunications Limited, you can compare the effects of market volatilities on Southwest Airlines and Singapore Telecommunicatio 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 Singapore Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Singapore Telecommunicatio.
Diversification Opportunities for Southwest Airlines and Singapore Telecommunicatio
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southwest and Singapore is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and Singapore Telecommunications L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Telecommunicatio 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 Singapore Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Telecommunicatio has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Singapore Telecommunicatio go up and down completely randomly.
Pair Corralation between Southwest Airlines and Singapore Telecommunicatio
Assuming the 90 days horizon Southwest Airlines Co is expected to generate 0.96 times more return on investment than Singapore Telecommunicatio. However, Southwest Airlines Co is 1.04 times less risky than Singapore Telecommunicatio. It trades about 0.23 of its potential returns per unit of risk. Singapore Telecommunications Limited is currently generating about 0.06 per unit of risk. If you would invest 2,801 in Southwest Airlines Co on September 4, 2024 and sell it today you would earn a total of 266.00 from holding Southwest Airlines Co or generate 9.5% 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. Singapore Telecommunications L
Performance |
| Timeline |
| Southwest Airlines |
| Singapore Telecommunicatio |
Southwest Airlines and Singapore Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Singapore Telecommunicatio
The main advantage of trading using opposite Southwest Airlines and Singapore Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Singapore Telecommunicatio 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 Singapore Telecommunicatio will offset losses from the drop in Singapore Telecommunicatio's long position.| Southwest Airlines vs. Perseus Mining Limited | Southwest Airlines vs. TITANIUM TRANSPORTGROUP | Southwest Airlines vs. Thai Beverage Public | Southwest Airlines vs. Dairy Farm International |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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