Correlation Between Southwest Airlines and STAG Industrial
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and STAG Industrial 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 STAG Industrial 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 STAG Industrial, you can compare the effects of market volatilities on Southwest Airlines and STAG Industrial 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 STAG Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and STAG Industrial.
Diversification Opportunities for Southwest Airlines and STAG Industrial
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southwest and STAG is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and STAG Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAG Industrial 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 STAG Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAG Industrial has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and STAG Industrial go up and down completely randomly.
Pair Corralation between Southwest Airlines and STAG Industrial
Assuming the 90 days horizon Southwest Airlines is expected to generate 12.25 times less return on investment than STAG Industrial. In addition to that, Southwest Airlines is 1.57 times more volatile than STAG Industrial. It trades about 0.0 of its total potential returns per unit of risk. STAG Industrial is currently generating about 0.03 per unit of volatility. If you would invest 2,899 in STAG Industrial on September 4, 2024 and sell it today you would earn a total of 563.00 from holding STAG Industrial or generate 19.42% 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. STAG Industrial
Performance |
| Timeline |
| Southwest Airlines |
| STAG Industrial |
Southwest Airlines and STAG Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and STAG Industrial
The main advantage of trading using opposite Southwest Airlines and STAG Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, STAG Industrial 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 STAG Industrial will offset losses from the drop in STAG Industrial'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 |
| STAG Industrial vs. Prologis | STAG Industrial vs. SEGRO Plc | STAG Industrial vs. Yara International ASA | STAG Industrial vs. EastGroup Properties |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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