Correlation Between Southwest Airlines and FIBRA Storage
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By analyzing existing cross correlation between Southwest Airlines and FIBRA Storage, you can compare the effects of market volatilities on Southwest Airlines and FIBRA Storage 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 FIBRA Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and FIBRA Storage.
Diversification Opportunities for Southwest Airlines and FIBRA Storage
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Southwest and FIBRA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and FIBRA Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIBRA Storage 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 are associated (or correlated) with FIBRA Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIBRA Storage has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and FIBRA Storage go up and down completely randomly.
Pair Corralation between Southwest Airlines and FIBRA Storage
Assuming the 90 days trading horizon Southwest Airlines is expected to generate 2.25 times more return on investment than FIBRA Storage. However, Southwest Airlines is 2.25 times more volatile than FIBRA Storage. It trades about 0.07 of its potential returns per unit of risk. FIBRA Storage is currently generating about 0.02 per unit of risk. If you would invest 48,150 in Southwest Airlines on September 25, 2024 and sell it today you would earn a total of 18,350 from holding Southwest Airlines or generate 38.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Southwest Airlines vs. FIBRA Storage
Performance |
Timeline |
Southwest Airlines |
FIBRA Storage |
Southwest Airlines and FIBRA Storage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Southwest Airlines and FIBRA Storage
The main advantage of trading using opposite Southwest Airlines and FIBRA Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, FIBRA Storage 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 FIBRA Storage will offset losses from the drop in FIBRA Storage's long position.Southwest Airlines vs. Hoteles City Express | Southwest Airlines vs. McEwen Mining | Southwest Airlines vs. Grupo Sports World | Southwest Airlines vs. GMxico Transportes SAB |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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