Correlation Between NH Foods and SkyWest
Can any of the company-specific risk be diversified away by investing in both NH Foods 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 NH Foods and SkyWest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH Foods Ltd and SkyWest, you can compare the effects of market volatilities on NH Foods 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 NH Foods with a short position of SkyWest. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Foods and SkyWest.
Diversification Opportunities for NH Foods and SkyWest
Pay attention - limited upside
The 3 months correlation between NIPMY and SkyWest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NH Foods Ltd and SkyWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyWest and NH Foods 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 NH Foods Ltd 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 NH Foods i.e., NH Foods and SkyWest go up and down completely randomly.
Pair Corralation between NH Foods and SkyWest
Assuming the 90 days horizon NH Foods is expected to generate 5.5 times less return on investment than SkyWest. But when comparing it to its historical volatility, NH Foods Ltd is 3.5 times less risky than SkyWest. It trades about 0.1 of its potential returns per unit of risk. SkyWest is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,880 in SkyWest on September 4, 2024 and sell it today you would earn a total of 9,563 from holding SkyWest or generate 508.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NH Foods Ltd vs. SkyWest
Performance |
| Timeline |
| NH Foods |
| SkyWest |
NH Foods and SkyWest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH Foods and SkyWest
The main advantage of trading using opposite NH Foods and SkyWest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Foods 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.The idea behind NH Foods Ltd and SkyWest 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.| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |