Correlation Between SkyWest and NH Foods
Can any of the company-specific risk be diversified away by investing in both SkyWest and NH Foods 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 NH Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkyWest and NH Foods Ltd, you can compare the effects of market volatilities on SkyWest and NH Foods 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 NH Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkyWest and NH Foods.
Diversification Opportunities for SkyWest and NH Foods
Pay attention - limited upside
The 3 months correlation between SkyWest and NIPMY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and NH Foods Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Foods 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 NH Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Foods has no effect on the direction of SkyWest i.e., SkyWest and NH Foods go up and down completely randomly.
Pair Corralation between SkyWest and NH Foods
Given the investment horizon of 90 days SkyWest is expected to generate 3.5 times more return on investment than NH Foods. However, SkyWest is 3.5 times more volatile than NH Foods Ltd. It trades about 0.15 of its potential returns per unit of risk. NH Foods Ltd is currently generating about 0.1 per unit of risk. 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 |
SkyWest vs. NH Foods Ltd
Performance |
| Timeline |
| SkyWest |
| NH Foods |
SkyWest and NH Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkyWest and NH Foods
The main advantage of trading using opposite SkyWest and NH Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkyWest position performs unexpectedly, NH Foods 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 NH Foods will offset losses from the drop in NH Foods' long position.| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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