Correlation Between SkyWest and Advanced Health
Can any of the company-specific risk be diversified away by investing in both SkyWest and Advanced Health 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 Advanced Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkyWest and Advanced Health Intelligence, you can compare the effects of market volatilities on SkyWest and Advanced Health 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 Advanced Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkyWest and Advanced Health.
Diversification Opportunities for SkyWest and Advanced Health
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SkyWest and Advanced is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Advanced Health Intelligence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Health Inte 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 Advanced Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Health Inte has no effect on the direction of SkyWest i.e., SkyWest and Advanced Health go up and down completely randomly.
Pair Corralation between SkyWest and Advanced Health
Given the investment horizon of 90 days SkyWest is expected to generate 28.54 times less return on investment than Advanced Health. But when comparing it to its historical volatility, SkyWest is 40.62 times less risky than Advanced Health. It trades about 0.17 of its potential returns per unit of risk. Advanced Health Intelligence is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Advanced Health Intelligence on September 14, 2024 and sell it today you would lose (4.60) from holding Advanced Health Intelligence or give up 92.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 87.68% |
| Values | Daily Returns |
SkyWest vs. Advanced Health Intelligence
Performance |
| Timeline |
| SkyWest |
| Advanced Health Inte |
SkyWest and Advanced Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkyWest and Advanced Health
The main advantage of trading using opposite SkyWest and Advanced Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkyWest position performs unexpectedly, Advanced Health 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 Advanced Health will offset losses from the drop in Advanced Health's long position.| SkyWest vs. Southwest Airlines | SkyWest vs. United Airlines Holdings | SkyWest vs. Frontier Group Holdings |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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