Correlation Between Singapore Airlines and SOUTHWEST AIRLINES
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines 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 Singapore Airlines and SOUTHWEST AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Airlines Limited and SOUTHWEST AIRLINES, you can compare the effects of market volatilities on Singapore Airlines 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 Singapore Airlines with a short position of SOUTHWEST AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and SOUTHWEST AIRLINES.
Diversification Opportunities for Singapore Airlines and SOUTHWEST AIRLINES
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Singapore and SOUTHWEST is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and SOUTHWEST AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHWEST AIRLINES and Singapore Airlines 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 Singapore Airlines 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 Singapore Airlines i.e., Singapore Airlines and SOUTHWEST AIRLINES go up and down completely randomly.
Pair Corralation between Singapore Airlines and SOUTHWEST AIRLINES
Assuming the 90 days trading horizon Singapore Airlines Limited is expected to under-perform the SOUTHWEST AIRLINES. But the stock apears to be less risky and, when comparing its historical volatility, Singapore Airlines Limited is 1.6 times less risky than SOUTHWEST AIRLINES. The stock trades about 0.0 of its potential returns per unit of risk. The SOUTHWEST AIRLINES is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,657 in SOUTHWEST AIRLINES on September 24, 2024 and sell it today you would earn a total of 486.00 from holding SOUTHWEST AIRLINES or generate 18.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Singapore Airlines Limited vs. SOUTHWEST AIRLINES
Performance |
Timeline |
Singapore Airlines |
SOUTHWEST AIRLINES |
Singapore Airlines and SOUTHWEST AIRLINES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Singapore Airlines and SOUTHWEST AIRLINES
The main advantage of trading using opposite Singapore Airlines and SOUTHWEST AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines 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's long position.Singapore Airlines vs. EAT WELL INVESTMENT | Singapore Airlines vs. Strategic Investments AS | Singapore Airlines vs. ECHO INVESTMENT ZY | Singapore Airlines vs. United Airlines Holdings |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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