Correlation Between Playtika Holding and Southwest Airlines

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

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

Diversification Opportunities for Playtika Holding and Southwest Airlines

-0.35

Correlation Coefficient

Playtika Holding  Southwest Airlines

Very good diversification

The 3 months correlation between Playtika and Southwest is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Playtika Holding Corp and Southwest Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Playtika Holding 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 Playtika Holding Corp 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 Playtika Holding i.e., Playtika Holding and Southwest Airlines go up and down completely randomly.

Pair Corralation between Playtika Holding and Southwest Airlines

Given the investment horizon of 90 days Playtika Holding Corp is expected to generate 1.19 times more return on investment than Southwest Airlines. However, Playtika Holding is 1.19 times more volatile than Southwest Airlines. It trades about 0.12 of its potential returns per unit of risk. Southwest Airlines is currently generating about -0.13 per unit of risk. If you would invest  685.00  in Playtika Holding Corp on February 26, 2024 and sell it today you would earn a total of  161.00  from holding Playtika Holding Corp or generate 23.5% return on investment over 90 days.

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

Playtika Holding Corp  vs.  Southwest Airlines

Playtika Holding Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Southwest Airlines

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Playtika Holding and Southwest Airlines

The main advantage of trading using opposite Playtika Holding and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtika Holding 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' long position.

The idea behind Playtika Holding Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.