Correlation Between GWILLI FOOD and SOUTHWEST AIRLINES

Can any of the company-specific risk be diversified away by investing in both GWILLI FOOD 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 GWILLI FOOD and SOUTHWEST AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GWILLI FOOD and SOUTHWEST AIRLINES, you can compare the effects of market volatilities on GWILLI FOOD 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 GWILLI FOOD with a short position of SOUTHWEST AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of GWILLI FOOD and SOUTHWEST AIRLINES.

Diversification Opportunities for GWILLI FOOD and SOUTHWEST AIRLINES

-0.17

Correlation Coefficient

GWILLI FOOD  SOUTHWEST AIRLINES

Good diversification

The 3 months correlation between GWILLI and SOUTHWEST is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding GWILLI FOOD and SOUTHWEST AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHWEST AIRLINES and GWILLI FOOD 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 GWILLI FOOD 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 GWILLI FOOD i.e., GWILLI FOOD and SOUTHWEST AIRLINES go up and down completely randomly.

Pair Corralation between GWILLI FOOD and SOUTHWEST AIRLINES

Assuming the 90 days trading horizon GWILLI FOOD is expected to under-perform the SOUTHWEST AIRLINES. But the stock apears to be less risky and, when comparing its historical volatility, GWILLI FOOD is 1.32 times less risky than SOUTHWEST AIRLINES. The stock trades about -0.04 of its potential returns per unit of risk. The SOUTHWEST AIRLINES is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,191  in SOUTHWEST AIRLINES on December 23, 2024 and sell it today you would lose (61.00) from holding SOUTHWEST AIRLINES or give up 1.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GWILLI FOOD  vs.  SOUTHWEST AIRLINES

GWILLI FOOD

Risk-Adjusted Performance

Very Weak

Over the last 90 days GWILLI FOOD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, GWILLI FOOD is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SOUTHWEST AIRLINES

Risk-Adjusted Performance

Very Weak

Over the last 90 days SOUTHWEST AIRLINES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SOUTHWEST AIRLINES is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GWILLI FOOD and SOUTHWEST AIRLINES

The main advantage of trading using opposite GWILLI FOOD and SOUTHWEST AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GWILLI FOOD 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.

The idea behind GWILLI FOOD and SOUTHWEST AIRLINES 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.