Correlation Between Contextlogic and SkyWest

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

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

Diversification Opportunities for Contextlogic and SkyWest

-0.01

Correlation Coefficient

Contextlogic  SkyWest

Good diversification

The 3 months correlation between Contextlogic and SkyWest is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Contextlogic and SkyWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyWest and Contextlogic 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 Contextlogic 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 Contextlogic i.e., Contextlogic and SkyWest go up and down completely randomly.

Pair Corralation between Contextlogic and SkyWest

Given the investment horizon of 90 days Contextlogic is expected to generate 1.51 times more return on investment than SkyWest. However, Contextlogic is 1.51 times more volatile than SkyWest. It trades about 0.07 of its potential returns per unit of risk. SkyWest is currently generating about -0.06 per unit of risk. If you would invest  660.00  in Contextlogic on December 22, 2024 and sell it today you would earn a total of  92.00  from holding Contextlogic or generate 13.94% return on investment over 90 days.

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

Contextlogic  vs.  SkyWest

Contextlogic

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Contextlogic are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Contextlogic exhibited solid returns over the last few months and may actually be approaching a breakup point.

SkyWest

Risk-Adjusted Performance

Very Weak

Over the last 90 days SkyWest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Contextlogic and SkyWest

The main advantage of trading using opposite Contextlogic and SkyWest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contextlogic 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 Contextlogic 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.