Correlation Between Galaxy Gaming and SkyWest

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

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

Diversification Opportunities for Galaxy Gaming and SkyWest

0.09

Correlation Coefficient

Galaxy Gaming  SkyWest

Significant diversification

The 3 months correlation between Galaxy and SkyWest is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Gaming and SkyWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyWest and Galaxy Gaming 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 Galaxy Gaming 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 Galaxy Gaming i.e., Galaxy Gaming and SkyWest go up and down completely randomly.

Pair Corralation between Galaxy Gaming and SkyWest

Given the investment horizon of 90 days Galaxy Gaming is expected to generate 4.58 times less return on investment than SkyWest. In addition to that, Galaxy Gaming is 2.13 times more volatile than SkyWest. It trades about 0.02 of its total potential returns per unit of risk. SkyWest is currently generating about 0.15 per unit of volatility. If you would invest  1,959  in SkyWest on October 11, 2024 and sell it today you would earn a total of  9,145  from holding SkyWest or generate 466.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Galaxy Gaming  vs.  SkyWest

Galaxy Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galaxy Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Galaxy Gaming is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SkyWest

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SkyWest showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Galaxy Gaming and SkyWest

The main advantage of trading using opposite Galaxy Gaming and SkyWest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galaxy Gaming 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.

The idea behind Galaxy Gaming and SkyWest 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.