Correlation Between Southwest Airlines and CODERE ONLINE

Can any of the company-specific risk be diversified away by investing in both Southwest Airlines and CODERE ONLINE 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 CODERE ONLINE 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 CODERE ONLINE LUX, you can compare the effects of market volatilities on Southwest Airlines and CODERE ONLINE 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 CODERE ONLINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southwest Airlines and CODERE ONLINE.

Diversification Opportunities for Southwest Airlines and CODERE ONLINE

0.37

Correlation Coefficient

Southwest Airlines  CODERE ONLINE

Weak diversification

The 3 months correlation between Southwest and CODERE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and CODERE ONLINE LUX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CODERE ONLINE LUX 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 CODERE ONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CODERE ONLINE LUX has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and CODERE ONLINE go up and down completely randomly.

Pair Corralation between Southwest Airlines and CODERE ONLINE

Assuming the 90 days horizon Southwest Airlines Co is expected to generate 0.9 times more return on investment than CODERE ONLINE. However, Southwest Airlines Co is 1.11 times less risky than CODERE ONLINE. It trades about 0.27 of its potential returns per unit of risk. CODERE ONLINE LUX is currently generating about 0.11 per unit of risk. If you would invest  2,214  in Southwest Airlines Co on April 23, 2025 and sell it today you would earn a total of  916.00  from holding Southwest Airlines Co or generate 41.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Southwest Airlines Co  vs.  CODERE ONLINE LUX

Southwest Airlines

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Southwest Airlines Co are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Southwest Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

CODERE ONLINE LUX

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CODERE ONLINE LUX are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CODERE ONLINE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southwest Airlines and CODERE ONLINE

The main advantage of trading using opposite Southwest Airlines and CODERE ONLINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southwest Airlines position performs unexpectedly, CODERE ONLINE 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 CODERE ONLINE will offset losses from the drop in CODERE ONLINE's long position.

The idea behind Southwest Airlines Co and CODERE ONLINE LUX 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.