Correlation Between SOUTHWEST AIRLINES and Ubisoft Entertainment
Can any of the company-specific risk be diversified away by investing in both SOUTHWEST AIRLINES and Ubisoft Entertainment 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 Ubisoft Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOUTHWEST AIRLINES and Ubisoft Entertainment SA, you can compare the effects of market volatilities on SOUTHWEST AIRLINES and Ubisoft Entertainment 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 Ubisoft Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST AIRLINES and Ubisoft Entertainment.
Diversification Opportunities for SOUTHWEST AIRLINES and Ubisoft Entertainment
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between SOUTHWEST and Ubisoft is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLINES and Ubisoft Entertainment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubisoft Entertainment 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 Ubisoft Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubisoft Entertainment has no effect on the direction of SOUTHWEST AIRLINES i.e., SOUTHWEST AIRLINES and Ubisoft Entertainment go up and down completely randomly.
Pair Corralation between SOUTHWEST AIRLINES and Ubisoft Entertainment
Assuming the 90 days trading horizon SOUTHWEST AIRLINES is expected to generate 0.83 times more return on investment than Ubisoft Entertainment. However, SOUTHWEST AIRLINES is 1.2 times less risky than Ubisoft Entertainment. It trades about 0.2 of its potential returns per unit of risk. Ubisoft Entertainment SA is currently generating about -0.07 per unit of risk. If you would invest 2,796 in SOUTHWEST AIRLINES on August 29, 2024 and sell it today you would earn a total of 251.00 from holding SOUTHWEST AIRLINES or generate 8.98% 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. Ubisoft Entertainment SA
Performance |
| Timeline |
| SOUTHWEST AIRLINES |
| Ubisoft Entertainment |
SOUTHWEST AIRLINES and Ubisoft Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOUTHWEST AIRLINES and Ubisoft Entertainment
The main advantage of trading using opposite SOUTHWEST AIRLINES and Ubisoft Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHWEST AIRLINES position performs unexpectedly, Ubisoft Entertainment 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 Ubisoft Entertainment will offset losses from the drop in Ubisoft Entertainment's long position.| SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Apple Inc | SOUTHWEST AIRLINES vs. Superior Plus Corp | SOUTHWEST AIRLINES vs. SIVERS SEMICONDUCTORS AB |
| Ubisoft Entertainment vs. Sea Limited | Ubisoft Entertainment vs. Superior Plus Corp | Ubisoft Entertainment vs. NMI Holdings | Ubisoft Entertainment 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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