Correlation Between Southwest Airlines and China Eastern
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and China Eastern 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 China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines and China Eastern Airlines, you can compare the effects of market volatilities on Southwest Airlines and China Eastern 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 China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and China Eastern.
Diversification Opportunities for Southwest Airlines and China Eastern
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southwest and China is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines 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 China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and China Eastern go up and down completely randomly.
Pair Corralation between Southwest Airlines and China Eastern
If you would invest 1,998 in China Eastern Airlines on January 25, 2024 and sell it today you would earn a total of 0.00 from holding China Eastern Airlines or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 1.61% |
| Values | Daily Returns |
Southwest Airlines vs. China Eastern Airlines
Performance |
| Timeline |
| Southwest Airlines |
| China Eastern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Southwest Airlines and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and China Eastern
The main advantage of trading using opposite Southwest Airlines and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, China Eastern 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 China Eastern will offset losses from the drop in China Eastern's long position.| Southwest Airlines vs. United Airlines Holdings | Southwest Airlines vs. American Airlines Group | Southwest Airlines vs. JetBlue Airways Corp | Southwest Airlines vs. Spirit Airlines |
| China Eastern vs. Merit Medical Systems | China Eastern vs. GDEV Inc | China Eastern vs. Skechers USA | China Eastern vs. HNI Corp |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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