Correlation Between SkyWest and Air Transport
Can any of the company-specific risk be diversified away by investing in both SkyWest and Air Transport 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 Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkyWest and Air Transport Services, you can compare the effects of market volatilities on SkyWest and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkyWest and Air Transport.
Diversification Opportunities for SkyWest and Air Transport
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SkyWest and Air is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of SkyWest i.e., SkyWest and Air Transport go up and down completely randomly.
Pair Corralation between SkyWest and Air Transport
Given the investment horizon of 90 days SkyWest is expected to generate 15.06 times more return on investment than Air Transport. However, SkyWest is 15.06 times more volatile than Air Transport Services. It trades about 0.39 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.52 per unit of risk. If you would invest 10,108 in SkyWest on November 2, 2024 and sell it today you would earn a total of 1,568 from holding SkyWest or generate 15.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
SkyWest vs. Air Transport Services
Performance |
| Timeline |
| SkyWest |
| Air Transport Services |
SkyWest and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkyWest and Air Transport
The main advantage of trading using opposite SkyWest and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkyWest position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| SkyWest vs. Copa Holdings SA | SkyWest vs. Sun Country Airlines | SkyWest vs. Air Transport Services | SkyWest vs. Frontier Group Holdings |
| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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