Correlation Between SunOpta and SkyWest
Can any of the company-specific risk be diversified away by investing in both SunOpta and SkyWest 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 SunOpta and SkyWest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunOpta and SkyWest, you can compare the effects of market volatilities on SunOpta and SkyWest 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 SunOpta with a short position of SkyWest. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunOpta and SkyWest.
Diversification Opportunities for SunOpta and SkyWest
Poor diversification
The 3 months correlation between SunOpta and SkyWest is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SunOpta and SkyWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyWest and SunOpta 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 SunOpta are associated (or correlated) with SkyWest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkyWest has no effect on the direction of SunOpta i.e., SunOpta and SkyWest go up and down completely randomly.
Pair Corralation between SunOpta and SkyWest
Given the investment horizon of 90 days SunOpta is expected to generate 10.55 times less return on investment than SkyWest. In addition to that, SunOpta is 1.29 times more volatile than SkyWest. It trades about 0.01 of its total potential returns per unit of risk. SkyWest is currently generating about 0.15 per unit of volatility. If you would invest 1,860 in SkyWest on September 2, 2024 and sell it today you would earn a total of 9,614 from holding SkyWest or generate 516.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunOpta vs. SkyWest
Performance |
| Timeline |
| SunOpta |
| SkyWest |
SunOpta and SkyWest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunOpta and SkyWest
The main advantage of trading using opposite SunOpta and SkyWest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunOpta position performs unexpectedly, SkyWest 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 SkyWest will offset losses from the drop in SkyWest's long position.| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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