Correlation Between SkyWest and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SkyWest and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkyWest and Dow Jones Industrial, you can compare the effects of market volatilities on SkyWest and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkyWest and Dow Jones.
Diversification Opportunities for SkyWest and Dow Jones
Almost no diversification
The 3 months correlation between SkyWest and Dow is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of SkyWest i.e., SkyWest and Dow Jones go up and down completely randomly.
Pair Corralation between SkyWest and Dow Jones
Given the investment horizon of 90 days SkyWest is expected to generate 2.65 times more return on investment than Dow Jones. However, SkyWest is 2.65 times more volatile than Dow Jones Industrial. It trades about 0.29 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 9,332 in SkyWest on August 24, 2024 and sell it today you would earn a total of 1,624 from holding SkyWest or generate 17.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SkyWest vs. Dow Jones Industrial
Performance |
| Timeline |
SkyWest and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SkyWest
Pair trading matchups for SkyWest
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SkyWest and Dow Jones
The main advantage of trading using opposite SkyWest and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkyWest position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| SkyWest vs. Copa Holdings SA | SkyWest vs. Sun Country Airlines | SkyWest vs. Air Transport Services | SkyWest vs. Frontier Group Holdings |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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