Correlation Between SHIN-ETSU CHEMICAL and SOUTHWEST AIRLINES
Can any of the company-specific risk be diversified away by investing in both SHIN-ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL and SOUTHWEST AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIN ETSU CHEMICAL and SOUTHWEST AIRLINES, you can compare the effects of market volatilities on SHIN-ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL with a short position of SOUTHWEST AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIN-ETSU CHEMICAL and SOUTHWEST AIRLINES.
Diversification Opportunities for SHIN-ETSU CHEMICAL and SOUTHWEST AIRLINES
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SHIN-ETSU and SOUTHWEST is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SHIN ETSU CHEMICAL and SOUTHWEST AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHWEST AIRLINES and SHIN-ETSU CHEMICAL 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 SHIN ETSU CHEMICAL 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 SHIN-ETSU CHEMICAL i.e., SHIN-ETSU CHEMICAL and SOUTHWEST AIRLINES go up and down completely randomly.
Pair Corralation between SHIN-ETSU CHEMICAL and SOUTHWEST AIRLINES
Assuming the 90 days trading horizon SHIN ETSU CHEMICAL is expected to under-perform the SOUTHWEST AIRLINES. In addition to that, SHIN-ETSU CHEMICAL is 1.49 times more volatile than SOUTHWEST AIRLINES. It trades about -0.32 of its total potential returns per unit of risk. SOUTHWEST AIRLINES is currently generating about 0.09 per unit of volatility. If you would invest 3,208 in SOUTHWEST AIRLINES on October 9, 2024 and sell it today you would earn a total of 43.00 from holding SOUTHWEST AIRLINES or generate 1.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SHIN ETSU CHEMICAL vs. SOUTHWEST AIRLINES
Performance |
Timeline |
SHIN ETSU CHEMICAL |
SOUTHWEST AIRLINES |
SHIN-ETSU CHEMICAL and SOUTHWEST AIRLINES Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SHIN-ETSU CHEMICAL and SOUTHWEST AIRLINES
The main advantage of trading using opposite SHIN-ETSU CHEMICAL and SOUTHWEST AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIN-ETSU CHEMICAL 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.SHIN-ETSU CHEMICAL vs. COSTCO WHOLESALE CDR | SHIN-ETSU CHEMICAL vs. Highlight Communications AG | SHIN-ETSU CHEMICAL vs. Cogent Communications Holdings | SHIN-ETSU CHEMICAL vs. MARKET VECTR RETAIL |
SOUTHWEST AIRLINES vs. ARDAGH METAL PACDL 0001 | SOUTHWEST AIRLINES vs. Transport International Holdings | SOUTHWEST AIRLINES vs. Summit Hotel Properties | SOUTHWEST AIRLINES vs. UNITED UTILITIES GR |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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