Correlation Between SkyWest and Aspen Digital
Can any of the company-specific risk be diversified away by investing in both SkyWest and Aspen Digital 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 SkyWest and Aspen Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkyWest and Aspen Digital, you can compare the effects of market volatilities on SkyWest and Aspen Digital 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 SkyWest with a short position of Aspen Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkyWest and Aspen Digital.
Diversification Opportunities for SkyWest and Aspen Digital
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SkyWest and Aspen is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Aspen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Digital and SkyWest 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 SkyWest are associated (or correlated) with Aspen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Digital has no effect on the direction of SkyWest i.e., SkyWest and Aspen Digital go up and down completely randomly.
Pair Corralation between SkyWest and Aspen Digital
Given the investment horizon of 90 days SkyWest is expected to generate 5.71 times more return on investment than Aspen Digital. However, SkyWest is 5.71 times more volatile than Aspen Digital. It trades about 0.35 of its potential returns per unit of risk. Aspen Digital is currently generating about 0.06 per unit of risk. If you would invest 9,482 in SkyWest on August 28, 2024 and sell it today you would earn a total of 1,937 from holding SkyWest or generate 20.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SkyWest vs. Aspen Digital
Performance |
| Timeline |
| SkyWest |
| Aspen Digital |
SkyWest and Aspen Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkyWest and Aspen Digital
The main advantage of trading using opposite SkyWest and Aspen Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkyWest position performs unexpectedly, Aspen Digital 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 Aspen Digital will offset losses from the drop in Aspen Digital's long position.| SkyWest vs. Copa Holdings SA | SkyWest vs. Sun Country Airlines | SkyWest vs. Air Transport Services | SkyWest vs. Frontier Group Holdings |
| Aspen Digital vs. Copa Holdings SA | Aspen Digital vs. United Airlines Holdings | Aspen Digital vs. Delta Air Lines | Aspen Digital vs. SkyWest |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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