Correlation Between SOUTHWEST AIRLINES and ATLAND SA
Can any of the company-specific risk be diversified away by investing in both SOUTHWEST AIRLINES and ATLAND SA 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 ATLAND SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOUTHWEST AIRLINES and ATLAND SA INH, you can compare the effects of market volatilities on SOUTHWEST AIRLINES and ATLAND SA 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 ATLAND SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST AIRLINES and ATLAND SA.
Diversification Opportunities for SOUTHWEST AIRLINES and ATLAND SA
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between SOUTHWEST and ATLAND is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLINES and ATLAND SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATLAND SA INH 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 ATLAND SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATLAND SA INH has no effect on the direction of SOUTHWEST AIRLINES i.e., SOUTHWEST AIRLINES and ATLAND SA go up and down completely randomly.
Pair Corralation between SOUTHWEST AIRLINES and ATLAND SA
Assuming the 90 days trading horizon SOUTHWEST AIRLINES is expected to under-perform the ATLAND SA. But the stock apears to be less risky and, when comparing its historical volatility, SOUTHWEST AIRLINES is 1.35 times less risky than ATLAND SA. The stock trades about -0.16 of its potential returns per unit of risk. The ATLAND SA INH is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,100 in ATLAND SA INH on October 22, 2024 and sell it today you would earn a total of 180.00 from holding ATLAND SA INH or generate 4.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOUTHWEST AIRLINES vs. ATLAND SA INH
Performance |
| Timeline |
| SOUTHWEST AIRLINES |
| ATLAND SA INH |
SOUTHWEST AIRLINES and ATLAND SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOUTHWEST AIRLINES and ATLAND SA
The main advantage of trading using opposite SOUTHWEST AIRLINES and ATLAND SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHWEST AIRLINES position performs unexpectedly, ATLAND SA 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 ATLAND SA will offset losses from the drop in ATLAND SA's long position.| SOUTHWEST AIRLINES vs. FIREWEED METALS P | SOUTHWEST AIRLINES vs. Air Transport Services | SOUTHWEST AIRLINES vs. ADRIATIC METALS LS 013355 | SOUTHWEST AIRLINES vs. DISTRICT METALS |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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