Correlation Between TRANSCANADA and Southwest Airlines
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By analyzing existing cross correlation between TRANSCANADA PIPELINES LTD and Southwest Airlines, you can compare the effects of market volatilities on TRANSCANADA 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 TRANSCANADA with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRANSCANADA and Southwest Airlines.
Diversification Opportunities for TRANSCANADA and Southwest Airlines
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRANSCANADA and Southwest is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding TRANSCANADA PIPELINES LTD and Southwest Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and TRANSCANADA 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 TRANSCANADA PIPELINES LTD 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 TRANSCANADA i.e., TRANSCANADA and Southwest Airlines go up and down completely randomly.
Pair Corralation between TRANSCANADA and Southwest Airlines
Assuming the 90 days trading horizon TRANSCANADA is expected to generate 2.23 times less return on investment than Southwest Airlines. But when comparing it to its historical volatility, TRANSCANADA PIPELINES LTD is 1.24 times less risky than Southwest Airlines. It trades about 0.02 of its potential returns per unit of risk. Southwest Airlines is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,872 in Southwest Airlines on September 3, 2024 and sell it today you would earn a total of 428.00 from holding Southwest Airlines or generate 14.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.77% |
| Values | Daily Returns |
TRANSCANADA PIPELINES LTD vs. Southwest Airlines
Performance |
| Timeline |
| TRANSCANADA PIPELINES LTD |
| Southwest Airlines |
TRANSCANADA and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRANSCANADA and Southwest Airlines
The main advantage of trading using opposite TRANSCANADA and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRANSCANADA 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.| TRANSCANADA vs. The Travelers Companies | TRANSCANADA vs. GE Aerospace | TRANSCANADA vs. Walmart | TRANSCANADA vs. Pfizer Inc |
| Southwest Airlines vs. United Airlines Holdings | Southwest Airlines vs. American Airlines Group | Southwest Airlines vs. JetBlue Airways Corp | Southwest Airlines vs. Delta Air Lines |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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