Correlation Between SOUTHWEST AIRLINES and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both SOUTHWEST AIRLINES and USWE SPORTS 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 USWE SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOUTHWEST AIRLINES and USWE SPORTS AB, you can compare the effects of market volatilities on SOUTHWEST AIRLINES and USWE SPORTS 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 USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST AIRLINES and USWE SPORTS.
Diversification Opportunities for SOUTHWEST AIRLINES and USWE SPORTS
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SOUTHWEST and USWE is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLINES and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB 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 USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of SOUTHWEST AIRLINES i.e., SOUTHWEST AIRLINES and USWE SPORTS go up and down completely randomly.
Pair Corralation between SOUTHWEST AIRLINES and USWE SPORTS
Assuming the 90 days trading horizon SOUTHWEST AIRLINES is expected to generate 0.68 times more return on investment than USWE SPORTS. However, SOUTHWEST AIRLINES is 1.47 times less risky than USWE SPORTS. It trades about 0.04 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about -0.07 per unit of risk. If you would invest 2,641 in SOUTHWEST AIRLINES on September 4, 2024 and sell it today you would earn a total of 525.00 from holding SOUTHWEST AIRLINES or generate 19.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
SOUTHWEST AIRLINES vs. USWE SPORTS AB
Performance |
| Timeline |
| SOUTHWEST AIRLINES |
| USWE SPORTS AB |
SOUTHWEST AIRLINES and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOUTHWEST AIRLINES and USWE SPORTS
The main advantage of trading using opposite SOUTHWEST AIRLINES and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHWEST AIRLINES position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS's long position.| SOUTHWEST AIRLINES vs. TOTAL GABON | SOUTHWEST AIRLINES vs. Walgreens Boots Alliance | SOUTHWEST AIRLINES vs. Peak Resources Limited |
| USWE SPORTS vs. SCANSOURCE | USWE SPORTS vs. Uber Technologies | USWE SPORTS vs. GALENA MINING LTD | USWE SPORTS vs. Playtech plc |
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.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |