Correlation Between SOUTHWEST AIRLINES and FUTURE GAMING
Can any of the company-specific risk be diversified away by investing in both SOUTHWEST AIRLINES and FUTURE GAMING 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 FUTURE GAMING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOUTHWEST AIRLINES and FUTURE GAMING GRP, you can compare the effects of market volatilities on SOUTHWEST AIRLINES and FUTURE GAMING 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 FUTURE GAMING. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST AIRLINES and FUTURE GAMING.
Diversification Opportunities for SOUTHWEST AIRLINES and FUTURE GAMING
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SOUTHWEST and FUTURE is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLINES and FUTURE GAMING GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUTURE GAMING GRP 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 are associated (or correlated) with FUTURE GAMING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUTURE GAMING GRP has no effect on the direction of SOUTHWEST AIRLINES i.e., SOUTHWEST AIRLINES and FUTURE GAMING go up and down completely randomly.
Pair Corralation between SOUTHWEST AIRLINES and FUTURE GAMING
Assuming the 90 days trading horizon SOUTHWEST AIRLINES is expected to generate 0.39 times more return on investment than FUTURE GAMING. However, SOUTHWEST AIRLINES is 2.57 times less risky than FUTURE GAMING. It trades about 0.11 of its potential returns per unit of risk. FUTURE GAMING GRP is currently generating about -0.27 per unit of risk. If you would invest 3,075 in SOUTHWEST AIRLINES on September 12, 2024 and sell it today you would earn a total of 120.00 from holding SOUTHWEST AIRLINES or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
SOUTHWEST AIRLINES vs. FUTURE GAMING GRP
Performance |
| Timeline |
| SOUTHWEST AIRLINES |
| FUTURE GAMING GRP |
SOUTHWEST AIRLINES and FUTURE GAMING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOUTHWEST AIRLINES and FUTURE GAMING
The main advantage of trading using opposite SOUTHWEST AIRLINES and FUTURE GAMING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHWEST AIRLINES position performs unexpectedly, FUTURE GAMING 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 FUTURE GAMING will offset losses from the drop in FUTURE GAMING's long position.| SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Apple Inc |
| FUTURE GAMING vs. Scientific Games | FUTURE GAMING vs. International Game Technology | FUTURE GAMING vs. Superior Plus Corp | FUTURE GAMING vs. SIVERS SEMICONDUCTORS AB |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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