Correlation Between Southwest Airlines and Intel
Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and Intel 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 Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southwest Airlines and Intel, you can compare the effects of market volatilities on Southwest Airlines and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and Intel.
Diversification Opportunities for Southwest Airlines and Intel
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Southwest and Intel is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Intel go up and down completely randomly.
Pair Corralation between Southwest Airlines and Intel
Considering the 90-day investment horizon Southwest Airlines is expected to generate 0.67 times more return on investment than Intel. However, Southwest Airlines is 1.49 times less risky than Intel. It trades about 0.03 of its potential returns per unit of risk. Intel is currently generating about -0.33 per unit of risk. If you would invest 2,884 in Southwest Airlines on January 20, 2024 and sell it today you would earn a total of 22.00 from holding Southwest Airlines or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Southwest Airlines vs. Intel
Performance |
| Timeline |
| Southwest Airlines |
| Intel |
Southwest Airlines and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southwest Airlines and Intel
The main advantage of trading using opposite Southwest Airlines and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel'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 |
| Intel vs. NVIDIA | Intel vs. Taiwan Semiconductor Manufacturing | Intel vs. Marvell Technology Group | Intel vs. Micron Technology |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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