Correlation Between SOUTHWEST AIRLINES and Casio Computer
Can any of the company-specific risk be diversified away by investing in both SOUTHWEST AIRLINES and Casio Computer 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 Casio Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOUTHWEST AIRLINES and Casio Computer CoLtd, you can compare the effects of market volatilities on SOUTHWEST AIRLINES and Casio Computer 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 Casio Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST AIRLINES and Casio Computer.
Diversification Opportunities for SOUTHWEST AIRLINES and Casio Computer
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SOUTHWEST and Casio is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLINES and Casio Computer CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer CoLtd 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 Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer CoLtd has no effect on the direction of SOUTHWEST AIRLINES i.e., SOUTHWEST AIRLINES and Casio Computer go up and down completely randomly.
Pair Corralation between SOUTHWEST AIRLINES and Casio Computer
Assuming the 90 days trading horizon SOUTHWEST AIRLINES is expected to generate 2.33 times more return on investment than Casio Computer. However, SOUTHWEST AIRLINES is 2.33 times more volatile than Casio Computer CoLtd. It trades about 0.15 of its potential returns per unit of risk. Casio Computer CoLtd is currently generating about -0.2 per unit of risk. If you would invest 2,830 in SOUTHWEST AIRLINES on August 24, 2024 and sell it today you would earn a total of 207.00 from holding SOUTHWEST AIRLINES or generate 7.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
SOUTHWEST AIRLINES vs. Casio Computer CoLtd
Performance |
| Timeline |
| SOUTHWEST AIRLINES |
| Casio Computer CoLtd |
SOUTHWEST AIRLINES and Casio Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOUTHWEST AIRLINES and Casio Computer
The main advantage of trading using opposite SOUTHWEST AIRLINES and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHWEST AIRLINES position performs unexpectedly, Casio Computer 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 Casio Computer will offset losses from the drop in Casio Computer's long position.| SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Apple Inc |
| Casio Computer vs. Amazon Inc | Casio Computer vs. Microsoft | Casio Computer vs. Tesla Inc | Casio Computer vs. Alphabet Class A |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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