Correlation Between SkyWest and SNDL
Can any of the company-specific risk be diversified away by investing in both SkyWest and SNDL 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 SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkyWest and SNDL Inc, you can compare the effects of market volatilities on SkyWest and SNDL 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 SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkyWest and SNDL.
Diversification Opportunities for SkyWest and SNDL
Good diversification
The 3 months correlation between SkyWest and SNDL is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL Inc 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of SkyWest i.e., SkyWest and SNDL go up and down completely randomly.
Pair Corralation between SkyWest and SNDL
Given the investment horizon of 90 days SkyWest is expected to generate 0.55 times more return on investment than SNDL. However, SkyWest is 1.82 times less risky than SNDL. It trades about 0.27 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.08 per unit of risk. If you would invest 10,133 in SkyWest on September 2, 2024 and sell it today you would earn a total of 1,341 from holding SkyWest or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SkyWest vs. SNDL Inc
Performance |
| Timeline |
| SkyWest |
| SNDL Inc |
SkyWest and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkyWest and SNDL
The main advantage of trading using opposite SkyWest and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkyWest position performs unexpectedly, SNDL 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 SNDL will offset losses from the drop in SNDL'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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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