Correlation Between Southwest Airlines and Rogers Communications

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

Diversification Opportunities for Southwest Airlines and Rogers Communications

0.7

Correlation Coefficient

Southwest Airlines  Rogers Communications

Poor diversification

The 3 months correlation between Southwest and Rogers is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Southwest Airlines Co and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications 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 Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of Southwest Airlines i.e., Southwest Airlines and Rogers Communications go up and down completely randomly.

Pair Corralation between Southwest Airlines and Rogers Communications

Assuming the 90 days horizon Southwest Airlines Co is expected to generate 1.51 times more return on investment than Rogers Communications. However, Southwest Airlines is 1.51 times more volatile than Rogers Communications. It trades about 0.28 of its potential returns per unit of risk. Rogers Communications is currently generating about 0.3 per unit of risk. If you would invest  2,184  in Southwest Airlines Co on April 24, 2025 and sell it today you would earn a total of  946.00  from holding Southwest Airlines Co or generate 43.32% return on investment over 90 days.

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

Southwest Airlines Co  vs.  Rogers Communications

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 unsteady basic indicators, Southwest Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

Rogers Communications

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rogers Communications are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Rogers Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Southwest Airlines and Rogers Communications

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

The idea behind Southwest Airlines Co and Rogers Communications 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.