Correlation Between SOUTHWEST and Dow Jones
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By analyzing existing cross correlation between SOUTHWEST AIRLS 345 and Dow Jones Industrial, you can compare the effects of market volatilities on SOUTHWEST and Dow Jones 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 with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST and Dow Jones.
Diversification Opportunities for SOUTHWEST and Dow Jones
Excellent diversification
The 3 months correlation between SOUTHWEST and Dow is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLS 345 and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and SOUTHWEST 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 AIRLS 345 are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of SOUTHWEST i.e., SOUTHWEST and Dow Jones go up and down completely randomly.
Pair Corralation between SOUTHWEST and Dow Jones
Assuming the 90 days trading horizon SOUTHWEST is expected to generate 10.37 times less return on investment than Dow Jones. In addition to that, SOUTHWEST is 1.08 times more volatile than Dow Jones Industrial. It trades about 0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 per unit of volatility. If you would invest 3,624,787 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 866,278 from holding Dow Jones Industrial or generate 23.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.55% |
| Values | Daily Returns |
SOUTHWEST AIRLS 345 vs. Dow Jones Industrial
Performance |
| Timeline |
SOUTHWEST and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SOUTHWEST AIRLS 345
Pair trading matchups for SOUTHWEST
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SOUTHWEST and Dow Jones
The main advantage of trading using opposite SOUTHWEST and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHWEST position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| SOUTHWEST vs. Origin Materials | SOUTHWEST vs. Sealed Air | SOUTHWEST vs. Mativ Holdings | SOUTHWEST vs. Stepan Company |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 CEOs Directory module to screen CEOs from public companies around the world.
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