Correlation Between SOUTHWEST AIRLINES and Vishay Intertechnology
Can any of the company-specific risk be diversified away by investing in both SOUTHWEST AIRLINES and Vishay Intertechnology 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 Vishay Intertechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOUTHWEST AIRLINES and Vishay Intertechnology, you can compare the effects of market volatilities on SOUTHWEST AIRLINES and Vishay Intertechnology 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 Vishay Intertechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST AIRLINES and Vishay Intertechnology.
Diversification Opportunities for SOUTHWEST AIRLINES and Vishay Intertechnology
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SOUTHWEST and Vishay is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLINES and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology 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 Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of SOUTHWEST AIRLINES i.e., SOUTHWEST AIRLINES and Vishay Intertechnology go up and down completely randomly.
Pair Corralation between SOUTHWEST AIRLINES and Vishay Intertechnology
Assuming the 90 days trading horizon SOUTHWEST AIRLINES is expected to generate 1.13 times more return on investment than Vishay Intertechnology. However, SOUTHWEST AIRLINES is 1.13 times more volatile than Vishay Intertechnology. It trades about 0.02 of its potential returns per unit of risk. Vishay Intertechnology is currently generating about -0.03 per unit of risk. If you would invest 2,722 in SOUTHWEST AIRLINES on August 31, 2024 and sell it today you would earn a total of 328.00 from holding SOUTHWEST AIRLINES or generate 12.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOUTHWEST AIRLINES vs. Vishay Intertechnology
Performance |
| Timeline |
| SOUTHWEST AIRLINES |
| Vishay Intertechnology |
SOUTHWEST AIRLINES and Vishay Intertechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOUTHWEST AIRLINES and Vishay Intertechnology
The main advantage of trading using opposite SOUTHWEST AIRLINES and Vishay Intertechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHWEST AIRLINES position performs unexpectedly, Vishay Intertechnology 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 Vishay Intertechnology will offset losses from the drop in Vishay Intertechnology's long position.| SOUTHWEST AIRLINES vs. TIANDE CHEMICAL | SOUTHWEST AIRLINES vs. WESTLAKE CHEMICAL | SOUTHWEST AIRLINES vs. CVW CLEANTECH INC | SOUTHWEST AIRLINES vs. Mitsui Chemicals |
| Vishay Intertechnology vs. Apple Inc | Vishay Intertechnology vs. Apple Inc | Vishay Intertechnology vs. Apple Inc | Vishay Intertechnology vs. Apple Inc |
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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