Correlation Between Tradegate and SOUTHWEST AIRLINES
Can any of the company-specific risk be diversified away by investing in both Tradegate and SOUTHWEST AIRLINES 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 Tradegate and SOUTHWEST AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tradegate AG Wertpapierhandelsbank and SOUTHWEST AIRLINES, you can compare the effects of market volatilities on Tradegate and SOUTHWEST AIRLINES 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 Tradegate with a short position of SOUTHWEST AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradegate and SOUTHWEST AIRLINES.
Diversification Opportunities for Tradegate and SOUTHWEST AIRLINES
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Tradegate and SOUTHWEST is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Tradegate AG Wertpapierhandels and SOUTHWEST AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHWEST AIRLINES and Tradegate 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 Tradegate AG Wertpapierhandelsbank are associated (or correlated) with SOUTHWEST AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHWEST AIRLINES has no effect on the direction of Tradegate i.e., Tradegate and SOUTHWEST AIRLINES go up and down completely randomly.
Pair Corralation between Tradegate and SOUTHWEST AIRLINES
Assuming the 90 days horizon Tradegate AG Wertpapierhandelsbank is expected to under-perform the SOUTHWEST AIRLINES. But the stock apears to be less risky and, when comparing its historical volatility, Tradegate AG Wertpapierhandelsbank is 1.87 times less risky than SOUTHWEST AIRLINES. The stock trades about -0.03 of its potential returns per unit of risk. The SOUTHWEST AIRLINES is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,024 in SOUTHWEST AIRLINES on September 26, 2024 and sell it today you would earn a total of 205.00 from holding SOUTHWEST AIRLINES or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tradegate AG Wertpapierhandels vs. SOUTHWEST AIRLINES
Performance |
| Timeline |
| Tradegate AG Wertpap |
| SOUTHWEST AIRLINES |
Tradegate and SOUTHWEST AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tradegate and SOUTHWEST AIRLINES
The main advantage of trading using opposite Tradegate and SOUTHWEST AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradegate position performs unexpectedly, SOUTHWEST AIRLINES 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 SOUTHWEST AIRLINES will offset losses from the drop in SOUTHWEST AIRLINES's long position.| Tradegate vs. Morgan Stanley | Tradegate vs. Morgan Stanley | Tradegate vs. The Charles Schwab | Tradegate vs. SP Global |
| SOUTHWEST AIRLINES vs. Ameriprise Financial | SOUTHWEST AIRLINES vs. National Bank Holdings | SOUTHWEST AIRLINES vs. Tradegate AG Wertpapierhandelsbank | SOUTHWEST AIRLINES vs. The Hanover Insurance |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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