Correlation Between Southwest Airlines and Blackrock World

Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Blackrock World 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 Southwest Airlines and Blackrock World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Southwest Airlines Co and Blackrock World Mining, you can compare the effects of market volatilities on Southwest Airlines and Blackrock World 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 Southwest Airlines with a short position of Blackrock World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Blackrock World.

Diversification Opportunities for Southwest Airlines and Blackrock World

-0.62

Correlation Coefficient

Southwest Airlines  Blackrock World

Excellent diversification

The 3 months correlation between Southwest and Blackrock is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and Blackrock World Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock World Mining and Southwest 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 Southwest Airlines Co are associated (or correlated) with Blackrock World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock World Mining has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Blackrock World go up and down completely randomly.

Pair Corralation between Southwest Airlines and Blackrock World

Assuming the 90 days trading horizon Southwest Airlines Co is expected to generate 1.39 times more return on investment than Blackrock World. However, Southwest Airlines is 1.39 times more volatile than Blackrock World Mining. It trades about 0.08 of its potential returns per unit of risk. Blackrock World Mining is currently generating about -0.11 per unit of risk. If you would invest  3,029  in Southwest Airlines Co on October 10, 2024 and sell it today you would earn a total of  248.00  from holding Southwest Airlines Co or generate 8.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Southwest Airlines Co  vs.  Blackrock World Mining

Southwest Airlines

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Southwest Airlines Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Southwest Airlines may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Blackrock World Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock World Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Southwest Airlines and Blackrock World

The main advantage of trading using opposite Southwest Airlines and Blackrock World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Blackrock World 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 Blackrock World will offset losses from the drop in Blackrock World's long position.

The idea behind Southwest Airlines Co and Blackrock World Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.