Southwest Airlines Correlations

LUV Stock

USD 34.83 0.68 1.99%

The current 90-days correlation between Southwest Airlines and United Airlines Holdings is 0.45 (i.e., Very weak diversification). The correlation of Southwest Airlines is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak. If the correlation is 0, the equities are not correlated; they are entirely random.

Southwest Airlines Correlation With Market

Modest diversification

The correlation between Southwest Airlines and DJI is 0.22 (i.e., Modest diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and DJI in the same portfolio, assuming nothing else is changed.

Check out Correlation Analysis to better understand how to build diversified portfolios, which includes a position in Southwest Airlines. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in employment.

For more information on how to buy Southwest Stock please use our How to Invest in Southwest Airlines guide.

Moving against Southwest Stock

0.68	LTM	LATAM Airlines Group	Pair Corr
0.52	CP	Canadian Pacific Railway	Pair Corr
0.51	CPA	Copa Holdings SA	Pair Corr
0.49	NSC	Norfolk Southern	Pair Corr
0.46	FLYX	flyExclusive,	Pair Corr
0.33	ALK	Alaska Air Group	Pair Corr
0.74	UNP	Union Pacific	Pair Corr
0.67	ATCOL	Atlas Corp	Pair Corr
0.62	ATSG	Air Transport Services	Pair Corr
0.53	RYAAY	Ryanair Holdings PLC	Pair Corr
0.75	G	Genpact Limited	Pair Corr
0.64	BR	Broadridge Financial	Pair Corr
0.37	SNCY	Sun Country Airlines	Pair Corr

Related Correlations Analysis

	UAL	AAL	JBLU	SAVE	DAL	ULCC
UAL		0.93	0.65	0.0	0.99	0.85	UAL
AAL	0.93		0.81	0.0	0.9	0.67	AAL
JBLU	0.65	0.81		0.0	0.6	0.44	JBLU
SAVE	0.0	0.0	0.0		0.0	0.0	SAVE
DAL	0.99	0.9	0.6	0.0		0.83	DAL
ULCC	0.85	0.67	0.44	0.0	0.83		ULCC
	UAL	AAL	JBLU	SAVE	DAL	ULCC

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Correlation Matchups

Over a given time period, the two securities move together when the Correlation Coefficient is positive. Conversely, the two assets move in opposite directions when the Correlation Coefficient is negative. Determining your positions' relationship to each other is valuable for analyzing and projecting your portfolio's future expected return and risk.

High positive correlations

DAL	+ 0.99	UAL
AAL	+ 0.93	UAL
DAL	+ 0.9	AAL
ULCC	+ 0.85	UAL
ULCC	+ 0.83	DAL
JBLU	+ 0.81	AAL

High negative correlations

ULCC	- 0.0	SAVE
DAL	- 0.0	SAVE
SAVE	- 0.0	JBLU
SAVE	- 0.0	AAL
SAVE	- 0.0	UAL

Risk-Adjusted Indicators

There is a big difference between Southwest Stock performing well and Southwest Airlines Company doing well as a business compared to the competition. There are so many exceptions to the norm that investors cannot definitively determine what's good or bad unless they analyze Southwest Airlines' multiple risk-adjusted performance indicators across the competitive landscape. These indicators are quantitative in nature and help investors forecast volatility and risk-adjusted expected returns across various positions.

	Mean Deviation	Jensen Alpha	Treynor Ratio	Potential Upside	Value @Risk	Maximum Drawdown
UAL	2.46	(0.23)	(0.22)	4.33	(5.48)	12.22
AAL	2.05	(0.52)	(0.72)	3.70	(4.62)	13.86
JBLU	3.20	(0.22)	(0.33)	4.19	(5.86)	29.90
SAVE	0.00	0.00	0.00	0.00	0.00	0.00
DAL	2.04	(0.30)	(0.31)	3.88	(5.54)	16.26
ULCC	3.46	(0.06)	(0.12)	5.58	(7.38)	24.49

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