Correlation Between Pinterest and SkyWest

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

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

Diversification Opportunities for Pinterest and SkyWest

-0.21

Correlation Coefficient

Pinterest  SkyWest

Very good diversification

The 3 months correlation between Pinterest and SkyWest is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and SkyWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyWest and Pinterest 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 Pinterest 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 Pinterest i.e., Pinterest and SkyWest go up and down completely randomly.

Pair Corralation between Pinterest and SkyWest

Given the investment horizon of 90 days Pinterest is expected to generate 4.83 times less return on investment than SkyWest. In addition to that, Pinterest is 1.31 times more volatile than SkyWest. It trades about 0.04 of its total potential returns per unit of risk. SkyWest is currently generating about 0.25 per unit of volatility. If you would invest  7,887  in SkyWest on September 17, 2024 and sell it today you would earn a total of  2,773  from holding SkyWest or generate 35.16% return on investment over 90 days.

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

Pinterest  vs.  SkyWest

Pinterest

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pinterest are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Pinterest may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SkyWest

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 19 (%) 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 Pinterest and SkyWest

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

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.