Correlation Between SOUTHWEST AIRLINES and PLAYTIKA HOLDING
Can any of the company-specific risk be diversified away by investing in both SOUTHWEST AIRLINES and PLAYTIKA HOLDING 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 PLAYTIKA HOLDING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOUTHWEST AIRLINES and PLAYTIKA HOLDING DL 01, you can compare the effects of market volatilities on SOUTHWEST AIRLINES and PLAYTIKA HOLDING 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 PLAYTIKA HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST AIRLINES and PLAYTIKA HOLDING.
Diversification Opportunities for SOUTHWEST AIRLINES and PLAYTIKA HOLDING
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SOUTHWEST and PLAYTIKA is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLINES and PLAYTIKA HOLDING DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTIKA HOLDING 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 PLAYTIKA HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTIKA HOLDING has no effect on the direction of SOUTHWEST AIRLINES i.e., SOUTHWEST AIRLINES and PLAYTIKA HOLDING go up and down completely randomly.
Pair Corralation between SOUTHWEST AIRLINES and PLAYTIKA HOLDING
Assuming the 90 days trading horizon SOUTHWEST AIRLINES is expected to generate 0.61 times more return on investment than PLAYTIKA HOLDING. However, SOUTHWEST AIRLINES is 1.63 times less risky than PLAYTIKA HOLDING. It trades about 0.12 of its potential returns per unit of risk. PLAYTIKA HOLDING DL 01 is currently generating about -0.47 per unit of risk. If you would invest 3,148 in SOUTHWEST AIRLINES on October 1, 2024 and sell it today you would earn a total of 100.00 from holding SOUTHWEST AIRLINES or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOUTHWEST AIRLINES vs. PLAYTIKA HOLDING DL 01
Performance |
| Timeline |
| SOUTHWEST AIRLINES |
| PLAYTIKA HOLDING |
SOUTHWEST AIRLINES and PLAYTIKA HOLDING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOUTHWEST AIRLINES and PLAYTIKA HOLDING
The main advantage of trading using opposite SOUTHWEST AIRLINES and PLAYTIKA HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHWEST AIRLINES position performs unexpectedly, PLAYTIKA HOLDING 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 PLAYTIKA HOLDING will offset losses from the drop in PLAYTIKA HOLDING's long position.| SOUTHWEST AIRLINES vs. Treasury Wine Estates | SOUTHWEST AIRLINES vs. PENN NATL GAMING | SOUTHWEST AIRLINES vs. DETALION GAMES SA | SOUTHWEST AIRLINES vs. GAMESTOP |
| PLAYTIKA HOLDING vs. Nintendo Co | PLAYTIKA HOLDING vs. Sea Limited | PLAYTIKA HOLDING vs. NEXON Co | PLAYTIKA HOLDING vs. Bilibili |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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