Correlation Between Wheaton Precious and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious 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 Wheaton Precious and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wheaton Precious Metals and Southwest Airlines Co, you can compare the effects of market volatilities on Wheaton Precious 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 Wheaton Precious with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Southwest Airlines.
Diversification Opportunities for Wheaton Precious and Southwest Airlines
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wheaton and Southwest is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Wheaton Precious 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 Wheaton Precious Metals 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 Wheaton Precious i.e., Wheaton Precious and Southwest Airlines go up and down completely randomly.
Pair Corralation between Wheaton Precious and Southwest Airlines
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 1.12 times more return on investment than Southwest Airlines. However, Wheaton Precious is 1.12 times more volatile than Southwest Airlines Co. It trades about 0.14 of its potential returns per unit of risk. Southwest Airlines Co is currently generating about 0.06 per unit of risk. If you would invest 457,535 in Wheaton Precious Metals on September 15, 2024 and sell it today you would earn a total of 24,465 from holding Wheaton Precious Metals or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Southwest Airlines Co
Performance |
| Timeline |
| Wheaton Precious Metals |
| Southwest Airlines |
Wheaton Precious and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Southwest Airlines
The main advantage of trading using opposite Wheaton Precious and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious 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.| Wheaton Precious vs. AIM ImmunoTech | Wheaton Precious vs. Gaming Realms plc | Wheaton Precious vs. Addtech | Wheaton Precious vs. Park Hotels Resorts |
| Southwest Airlines vs. Monks Investment Trust | Southwest Airlines vs. Wheaton Precious Metals | Southwest Airlines vs. Cornish Metals | Southwest Airlines vs. The Mercantile Investment |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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