Correlation Between SOUTHWEST AIRLINES and United Internet
Can any of the company-specific risk be diversified away by investing in both SOUTHWEST AIRLINES and United Internet 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 United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOUTHWEST AIRLINES and United Internet AG, you can compare the effects of market volatilities on SOUTHWEST AIRLINES and United Internet 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 United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST AIRLINES and United Internet.
Diversification Opportunities for SOUTHWEST AIRLINES and United Internet
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SOUTHWEST and United is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLINES and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of SOUTHWEST AIRLINES i.e., SOUTHWEST AIRLINES and United Internet go up and down completely randomly.
Pair Corralation between SOUTHWEST AIRLINES and United Internet
Assuming the 90 days trading horizon SOUTHWEST AIRLINES is expected to generate 0.91 times more return on investment than United Internet. However, SOUTHWEST AIRLINES is 1.1 times less risky than United Internet. It trades about 0.01 of its potential returns per unit of risk. United Internet AG is currently generating about -0.02 per unit of risk. If you would invest 3,213 in SOUTHWEST AIRLINES on October 14, 2024 and sell it today you would earn a total of 29.00 from holding SOUTHWEST AIRLINES or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOUTHWEST AIRLINES vs. United Internet AG
Performance |
| Timeline |
| SOUTHWEST AIRLINES |
| United Internet AG |
SOUTHWEST AIRLINES and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOUTHWEST AIRLINES and United Internet
The main advantage of trading using opposite SOUTHWEST AIRLINES and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHWEST AIRLINES position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet's long position.| SOUTHWEST AIRLINES vs. RETAIL FOOD GROUP | SOUTHWEST AIRLINES vs. SPARTAN STORES | SOUTHWEST AIRLINES vs. National Retail Properties | SOUTHWEST AIRLINES vs. DeVry Education Group |
| United Internet vs. Aedas Homes SA | United Internet vs. Perdoceo Education | United Internet vs. OFFICE DEPOT | United Internet vs. CITY OFFICE REIT |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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