Correlation Between Astronics and Sky Harbour

Can any of the company-specific risk be diversified away by investing in both Astronics and Sky Harbour 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 Astronics and Sky Harbour into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astronics and Sky Harbour Group, you can compare the effects of market volatilities on Astronics and Sky Harbour 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 Astronics with a short position of Sky Harbour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astronics and Sky Harbour.

Diversification Opportunities for Astronics and Sky Harbour

-0.54

Correlation Coefficient

Astronics  Sky Harbour

Excellent diversification

The 3 months correlation between Astronics and Sky is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Astronics and Sky Harbour Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sky Harbour Group and Astronics 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 Astronics are associated (or correlated) with Sky Harbour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sky Harbour Group has no effect on the direction of Astronics i.e., Astronics and Sky Harbour go up and down completely randomly.

Pair Corralation between Astronics and Sky Harbour

Given the investment horizon of 90 days Astronics is expected to generate 0.75 times more return on investment than Sky Harbour. However, Astronics is 1.33 times less risky than Sky Harbour. It trades about 0.18 of its potential returns per unit of risk. Sky Harbour Group is currently generating about -0.01 per unit of risk. If you would invest  1,657  in Astronics on December 1, 2024 and sell it today you would earn a total of  344.00  from holding Astronics or generate 20.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Astronics  vs.  Sky Harbour Group

Astronics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Astronics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Astronics displayed solid returns over the last few months and may actually be approaching a breakup point.

Sky Harbour Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sky Harbour Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Sky Harbour is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Astronics and Sky Harbour

The main advantage of trading using opposite Astronics and Sky Harbour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astronics position performs unexpectedly, Sky Harbour 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 Sky Harbour will offset losses from the drop in Sky Harbour's long position.

The idea behind Astronics and Sky Harbour Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.