Correlation Between Wing Yip and Southwest Airlines

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

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

Diversification Opportunities for Wing Yip and Southwest Airlines

-0.3

Correlation Coefficient

Wing Yip  Southwest Airlines

Very good diversification

The 3 months correlation between Wing and Southwest is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wing Yip Food and Southwest Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines and Wing Yip 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 Wing Yip Food 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 Wing Yip i.e., Wing Yip and Southwest Airlines go up and down completely randomly.

Pair Corralation between Wing Yip and Southwest Airlines

Given the investment horizon of 90 days Wing Yip Food is expected to under-perform the Southwest Airlines. In addition to that, Wing Yip is 4.9 times more volatile than Southwest Airlines. It trades about -0.13 of its total potential returns per unit of risk. Southwest Airlines is currently generating about 0.01 per unit of volatility. If you would invest  3,011  in Southwest Airlines on May 7, 2025 and sell it today you would lose (19.00) from holding Southwest Airlines or give up 0.63% of portfolio value over 90 days.

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

Wing Yip Food  vs.  Southwest Airlines

Wing Yip Food

Risk-Adjusted Performance

Weakest

Over the last 90 days Wing Yip Food has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 fairly stable basic indicators, Southwest Airlines is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Wing Yip and Southwest Airlines

The main advantage of trading using opposite Wing Yip and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wing Yip 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 Wing Yip Food and Southwest Airlines 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..