Correlation Between Southwest Airlines and Walgreens Boots
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Walgreens Boots 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 Walgreens Boots 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 Walgreens Boots Alliance, you can compare the effects of market volatilities on Southwest Airlines and Walgreens Boots 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 Walgreens Boots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Walgreens Boots.
Diversification Opportunities for Southwest Airlines and Walgreens Boots
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Southwest and Walgreens is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and Walgreens Boots Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walgreens Boots Alliance 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 Walgreens Boots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walgreens Boots Alliance has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Walgreens Boots go up and down completely randomly.
Pair Corralation between Southwest Airlines and Walgreens Boots
Assuming the 90 days horizon Southwest Airlines Co is expected to generate 0.76 times more return on investment than Walgreens Boots. However, Southwest Airlines Co is 1.32 times less risky than Walgreens Boots. It trades about 0.04 of its potential returns per unit of risk. Walgreens Boots Alliance is currently generating about -0.1 per unit of risk. If you would invest 2,653 in Southwest Airlines Co on September 4, 2024 and sell it today you would earn a total of 414.00 from holding Southwest Airlines Co or generate 15.6% 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. Walgreens Boots Alliance
Performance |
| Timeline |
| Southwest Airlines |
| Walgreens Boots Alliance |
Southwest Airlines and Walgreens Boots Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Walgreens Boots
The main advantage of trading using opposite Southwest Airlines and Walgreens Boots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Walgreens Boots 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 Walgreens Boots will offset losses from the drop in Walgreens Boots' 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 |
| Walgreens Boots vs. Commonwealth Bank of | Walgreens Boots vs. Aozora Bank | Walgreens Boots vs. OAKTRSPECLENDNEW | Walgreens Boots 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |