Correlation Between SOUTHWEST AIRLINES and KBC Group
Can any of the company-specific risk be diversified away by investing in both SOUTHWEST AIRLINES and KBC Group 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 KBC Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOUTHWEST AIRLINES and KBC Group NV, you can compare the effects of market volatilities on SOUTHWEST AIRLINES and KBC Group 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 KBC Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST AIRLINES and KBC Group.
Diversification Opportunities for SOUTHWEST AIRLINES and KBC Group
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SOUTHWEST and KBC is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLINES and KBC Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Group NV 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 KBC Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Group NV has no effect on the direction of SOUTHWEST AIRLINES i.e., SOUTHWEST AIRLINES and KBC Group go up and down completely randomly.
Pair Corralation between SOUTHWEST AIRLINES and KBC Group
Assuming the 90 days trading horizon SOUTHWEST AIRLINES is expected to generate 1.67 times more return on investment than KBC Group. However, SOUTHWEST AIRLINES is 1.67 times more volatile than KBC Group NV. It trades about 0.11 of its potential returns per unit of risk. KBC Group NV is currently generating about 0.15 per unit of risk. If you would invest 2,825 in SOUTHWEST AIRLINES on October 24, 2024 and sell it today you would earn a total of 331.00 from holding SOUTHWEST AIRLINES or generate 11.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SOUTHWEST AIRLINES vs. KBC Group NV
Performance |
Timeline |
SOUTHWEST AIRLINES |
KBC Group NV |
SOUTHWEST AIRLINES and KBC Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SOUTHWEST AIRLINES and KBC Group
The main advantage of trading using opposite SOUTHWEST AIRLINES and KBC Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOUTHWEST AIRLINES position performs unexpectedly, KBC Group 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 KBC Group will offset losses from the drop in KBC Group's long position.SOUTHWEST AIRLINES vs. EVS Broadcast Equipment | SOUTHWEST AIRLINES vs. RCS MediaGroup SpA | SOUTHWEST AIRLINES vs. Gold Road Resources | SOUTHWEST AIRLINES vs. Liberty Broadband |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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