Correlation Between SkyWest and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both SkyWest and Singapore Airlines 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 Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkyWest and Singapore Airlines, you can compare the effects of market volatilities on SkyWest and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkyWest and Singapore Airlines.
Diversification Opportunities for SkyWest and Singapore Airlines
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between SkyWest and Singapore is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of SkyWest i.e., SkyWest and Singapore Airlines go up and down completely randomly.
Pair Corralation between SkyWest and Singapore Airlines
Given the investment horizon of 90 days SkyWest is expected to under-perform the Singapore Airlines. But the stock apears to be less risky and, when comparing its historical volatility, SkyWest is 1.98 times less risky than Singapore Airlines. The stock trades about -0.3 of its potential returns per unit of risk. The Singapore Airlines is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 478.00 in Singapore Airlines on November 30, 2024 and sell it today you would earn a total of 22.00 from holding Singapore Airlines or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SkyWest vs. Singapore Airlines
Performance |
| Timeline |
| SkyWest |
| Singapore Airlines |
SkyWest and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkyWest and Singapore Airlines
The main advantage of trading using opposite SkyWest and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkyWest position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| SkyWest vs. Copa Holdings SA | SkyWest vs. Sun Country Airlines | SkyWest vs. Air Transport Services | SkyWest vs. Frontier Group Holdings |
| Singapore Airlines vs. Cathay Pacific Airways | Singapore Airlines vs. International Consolidated Airlines | Singapore Airlines vs. Air France KLM | Singapore Airlines vs. Qantas Airways Ltd |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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