Correlation Between SEEK and Southwest Airlines

Can any of the company-specific risk be diversified away by investing in both SEEK and Southwest Airlines 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 SEEK and Southwest Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SEEK Limited and Southwest Airlines Co, you can compare the effects of market volatilities on SEEK and Southwest Airlines 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 SEEK with a short position of Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEEK and Southwest Airlines.

Diversification Opportunities for SEEK and Southwest Airlines

0.13

Correlation Coefficient

SEEK  Southwest Airlines

Average diversification

The 3 months correlation between SEEK and Southwest is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SEEK Limited and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and SEEK 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 SEEK Limited are associated (or correlated) with Southwest Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Airlines has no effect on the direction of SEEK i.e., SEEK and Southwest Airlines go up and down completely randomly.

Pair Corralation between SEEK and Southwest Airlines

Assuming the 90 days horizon SEEK Limited is expected to generate 0.66 times more return on investment than Southwest Airlines. However, SEEK Limited is 1.52 times less risky than Southwest Airlines. It trades about 0.1 of its potential returns per unit of risk. Southwest Airlines Co is currently generating about -0.05 per unit of risk. If you would invest  1,230  in SEEK Limited on May 12, 2025 and sell it today you would earn a total of  120.00  from holding SEEK Limited or generate 9.76% return on investment over 90 days.

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

SEEK Limited  vs.  Southwest Airlines Co

SEEK Limited

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in SEEK Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SEEK may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Southwest Airlines

Risk-Adjusted Performance

Weakest

Over the last 90 days Southwest Airlines Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SEEK and Southwest Airlines

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

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