Correlation Between Thermo Fisher and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Thermo Fisher 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 Thermo Fisher and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thermo Fisher Scientific and Southwest Airlines Co, you can compare the effects of market volatilities on Thermo Fisher 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 Thermo Fisher with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermo Fisher and Southwest Airlines.
Diversification Opportunities for Thermo Fisher and Southwest Airlines
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Thermo and Southwest is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Thermo Fisher Scientific and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Thermo Fisher 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 Thermo Fisher Scientific 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 Thermo Fisher i.e., Thermo Fisher and Southwest Airlines go up and down completely randomly.
Pair Corralation between Thermo Fisher and Southwest Airlines
Assuming the 90 days horizon Thermo Fisher Scientific is expected to under-perform the Southwest Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Thermo Fisher Scientific is 1.33 times less risky than Southwest Airlines. The stock trades about -0.07 of its potential returns per unit of risk. The Southwest Airlines Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,609 in Southwest Airlines Co on September 12, 2024 and sell it today you would earn a total of 573.00 from holding Southwest Airlines Co or generate 21.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermo Fisher Scientific vs. Southwest Airlines Co
Performance |
| Timeline |
| Thermo Fisher Scientific |
| Southwest Airlines |
Thermo Fisher and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermo Fisher and Southwest Airlines
The main advantage of trading using opposite Thermo Fisher and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermo Fisher 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' long position.| Thermo Fisher vs. MCEWEN MINING INC | Thermo Fisher vs. REINET INVESTMENTS SCA | Thermo Fisher vs. Western Copper and | Thermo Fisher vs. GALENA MINING LTD |
| Southwest Airlines vs. RYANAIR HLDGS ADR | Southwest Airlines vs. Ryanair Holdings plc | Southwest Airlines vs. Superior Plus Corp | Southwest Airlines 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |