Correlation Between World Houseware and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both World Houseware 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 World Houseware and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Houseware Limited and Southwest Airlines, you can compare the effects of market volatilities on World Houseware 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 World Houseware with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Houseware and Southwest Airlines.
Diversification Opportunities for World Houseware and Southwest Airlines
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between World and Southwest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding World Houseware Limited and Southwest Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and World Houseware 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 World Houseware Limited 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 World Houseware i.e., World Houseware and Southwest Airlines go up and down completely randomly.
Pair Corralation between World Houseware and Southwest Airlines
Assuming the 90 days horizon World Houseware Limited is expected to generate 1.96 times more return on investment than Southwest Airlines. However, World Houseware is 1.96 times more volatile than Southwest Airlines. It trades about 0.01 of its potential returns per unit of risk. Southwest Airlines is currently generating about 0.01 per unit of risk. If you would invest 7.00 in World Houseware Limited on November 28, 2024 and sell it today you would lose (2.00) from holding World Houseware Limited or give up 28.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.16% |
| Values | Daily Returns |
World Houseware Limited vs. Southwest Airlines
Performance |
| Timeline |
| World Houseware |
| Southwest Airlines |
World Houseware and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Houseware and Southwest Airlines
The main advantage of trading using opposite World Houseware and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Houseware 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.| World Houseware vs. Skillz Platform | World Houseware vs. Sonos Inc | World Houseware vs. Gamehost | World Houseware vs. Playtech plc |
| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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