Correlation Between Southwest Airlines and CM Hospitalar
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and CM Hospitalar 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 CM Hospitalar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines Co and CM Hospitalar SA, you can compare the effects of market volatilities on Southwest Airlines and CM Hospitalar 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 CM Hospitalar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and CM Hospitalar.
Diversification Opportunities for Southwest Airlines and CM Hospitalar
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southwest and VVEO3 is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and CM Hospitalar SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CM Hospitalar SA 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 Co are associated (or correlated) with CM Hospitalar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CM Hospitalar SA has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and CM Hospitalar go up and down completely randomly.
Pair Corralation between Southwest Airlines and CM Hospitalar
Assuming the 90 days trading horizon Southwest Airlines Co is expected to generate 0.26 times more return on investment than CM Hospitalar. However, Southwest Airlines Co is 3.88 times less risky than CM Hospitalar. It trades about -0.03 of its potential returns per unit of risk. CM Hospitalar SA is currently generating about -0.29 per unit of risk. If you would invest 14,715 in Southwest Airlines Co on February 26, 2024 and sell it today you would lose (393.00) from holding Southwest Airlines Co or give up 2.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Southwest Airlines Co vs. CM Hospitalar SA
Performance |
Timeline |
Southwest Airlines |
CM Hospitalar SA |
Southwest Airlines and CM Hospitalar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Southwest Airlines and CM Hospitalar
The main advantage of trading using opposite Southwest Airlines and CM Hospitalar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, CM Hospitalar 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 CM Hospitalar will offset losses from the drop in CM Hospitalar's long position.The idea behind Southwest Airlines Co and CM Hospitalar SA 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.CM Hospitalar vs. Profarma Distribuidora de | CM Hospitalar vs. Energisa SA | CM Hospitalar vs. BTG Pactual Logstica | CM Hospitalar vs. Plano Plano Desenvolvimento |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |