Correlation Between Kontoor Brands and SkyWest
Can any of the company-specific risk be diversified away by investing in both Kontoor Brands and SkyWest 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 Kontoor Brands and SkyWest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kontoor Brands and SkyWest, you can compare the effects of market volatilities on Kontoor Brands and SkyWest 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 Kontoor Brands with a short position of SkyWest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kontoor Brands and SkyWest.
Diversification Opportunities for Kontoor Brands and SkyWest
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kontoor and SkyWest is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and SkyWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyWest and Kontoor Brands 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 Kontoor Brands are associated (or correlated) with SkyWest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkyWest has no effect on the direction of Kontoor Brands i.e., Kontoor Brands and SkyWest go up and down completely randomly.
Pair Corralation between Kontoor Brands and SkyWest
Considering the 90-day investment horizon Kontoor Brands is expected to generate 1.76 times less return on investment than SkyWest. In addition to that, Kontoor Brands is 1.21 times more volatile than SkyWest. It trades about 0.17 of its total potential returns per unit of risk. SkyWest is currently generating about 0.36 per unit of volatility. If you would invest 7,530 in SkyWest on September 3, 2024 and sell it today you would earn a total of 3,944 from holding SkyWest or generate 52.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kontoor Brands vs. SkyWest
Performance |
| Timeline |
| Kontoor Brands |
| SkyWest |
Kontoor Brands and SkyWest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kontoor Brands and SkyWest
The main advantage of trading using opposite Kontoor Brands and SkyWest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kontoor Brands position performs unexpectedly, SkyWest 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 SkyWest will offset losses from the drop in SkyWest's long position.| Kontoor Brands vs. Vince Holding Corp | Kontoor Brands vs. Ermenegildo Zegna NV | Kontoor Brands vs. Columbia Sportswear | Kontoor Brands vs. Gildan Activewear |
| SkyWest vs. Copa Holdings SA | SkyWest vs. Sun Country Airlines | SkyWest vs. Air Transport Services | SkyWest vs. Frontier Group Holdings |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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