Correlation Between SOUTHWEST AIRLINES and TSOGO SUN

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

By analyzing existing cross correlation between SOUTHWEST AIRLINES and TSOGO SUN GAMING, you can compare the effects of market volatilities on SOUTHWEST AIRLINES and TSOGO SUN 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 TSOGO SUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOUTHWEST AIRLINES and TSOGO SUN.

Diversification Opportunities for SOUTHWEST AIRLINES and TSOGO SUN

0.03

Correlation Coefficient

SOUTHWEST AIRLINES  TSOGO SUN

Significant diversification

The 3 months correlation between SOUTHWEST and TSOGO is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SOUTHWEST AIRLINES and TSOGO SUN GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSOGO SUN GAMING 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 TSOGO SUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSOGO SUN GAMING has no effect on the direction of SOUTHWEST AIRLINES i.e., SOUTHWEST AIRLINES and TSOGO SUN go up and down completely randomly.

Pair Corralation between SOUTHWEST AIRLINES and TSOGO SUN

Assuming the 90 days trading horizon SOUTHWEST AIRLINES is expected to generate 0.77 times more return on investment than TSOGO SUN. However, SOUTHWEST AIRLINES is 1.29 times less risky than TSOGO SUN. It trades about -0.05 of its potential returns per unit of risk. TSOGO SUN GAMING is currently generating about -0.04 per unit of risk. If you would invest  2,787  in SOUTHWEST AIRLINES on May 12, 2025 and sell it today you would lose (250.00) from holding SOUTHWEST AIRLINES or give up 8.97% of portfolio value over 90 days.

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

SOUTHWEST AIRLINES  vs.  TSOGO SUN GAMING

SOUTHWEST AIRLINES

Risk-Adjusted Performance

Weakest

Over the last 90 days SOUTHWEST AIRLINES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

TSOGO SUN GAMING

Risk-Adjusted Performance

Weakest

Over the last 90 days TSOGO SUN GAMING 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 SOUTHWEST AIRLINES and TSOGO SUN

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

The idea behind SOUTHWEST AIRLINES and TSOGO SUN GAMING 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.