Correlation Between SkyWest and Pool
Can any of the company-specific risk be diversified away by investing in both SkyWest and Pool 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 Pool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkyWest and Pool Corporation, you can compare the effects of market volatilities on SkyWest and Pool 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 Pool. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkyWest and Pool.
Diversification Opportunities for SkyWest and Pool
Very weak diversification
The 3 months correlation between SkyWest and Pool is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool 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 Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of SkyWest i.e., SkyWest and Pool go up and down completely randomly.
Pair Corralation between SkyWest and Pool
Given the investment horizon of 90 days SkyWest is expected to generate 1.12 times more return on investment than Pool. However, SkyWest is 1.12 times more volatile than Pool Corporation. It trades about 0.13 of its potential returns per unit of risk. Pool Corporation is currently generating about 0.02 per unit of risk. If you would invest 7,699 in SkyWest on September 3, 2024 and sell it today you would earn a total of 3,775 from holding SkyWest or generate 49.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SkyWest vs. Pool Corp.
Performance |
| Timeline |
| SkyWest |
| Pool |
SkyWest and Pool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkyWest and Pool
The main advantage of trading using opposite SkyWest and Pool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkyWest position performs unexpectedly, Pool 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 Pool will offset losses from the drop in Pool's 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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