Correlation Between Redwire Corp and Sky Harbour

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

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

Diversification Opportunities for Redwire Corp and Sky Harbour

-0.44

Correlation Coefficient

Redwire Corp  Sky Harbour

Very good diversification

The 3 months correlation between Redwire and Sky is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Redwire Corp 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 Redwire Corp 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 Redwire Corp 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 Redwire Corp i.e., Redwire Corp and Sky Harbour go up and down completely randomly.

Pair Corralation between Redwire Corp and Sky Harbour

Considering the 90-day investment horizon Redwire Corp is expected to under-perform the Sky Harbour. In addition to that, Redwire Corp is 4.28 times more volatile than Sky Harbour Group. It trades about -0.33 of its total potential returns per unit of risk. Sky Harbour Group is currently generating about 0.09 per unit of volatility. If you would invest  1,058  in Sky Harbour Group on December 5, 2024 and sell it today you would earn a total of  31.00  from holding Sky Harbour Group or generate 2.93% return on investment over 90 days.

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

Redwire Corp  vs.  Sky Harbour Group

Redwire Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Redwire Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Redwire Corp showed 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 latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Redwire Corp and Sky Harbour

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

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.