Correlation Between SkyWest and ANA Holdings

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

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

Diversification Opportunities for SkyWest and ANA Holdings

-0.25

Correlation Coefficient

SkyWest  ANA Holdings

Very good diversification

The 3 months correlation between SkyWest and ANA is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and ANA Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANA Holdings ADR and SkyWest 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 SkyWest are associated (or correlated) with ANA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANA Holdings ADR has no effect on the direction of SkyWest i.e., SkyWest and ANA Holdings go up and down completely randomly.

Pair Corralation between SkyWest and ANA Holdings

Given the investment horizon of 90 days SkyWest is expected to under-perform the ANA Holdings. But the stock apears to be less risky and, when comparing its historical volatility, SkyWest is 1.54 times less risky than ANA Holdings. The stock trades about -0.32 of its potential returns per unit of risk. The ANA Holdings ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  379.00  in ANA Holdings ADR on December 1, 2024 and sell it today you would earn a total of  7.00  from holding ANA Holdings ADR or generate 1.85% return on investment over 90 days.

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

SkyWest  vs.  ANA Holdings ADR

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 weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

ANA Holdings ADR

Risk-Adjusted Performance

Weak

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

Pair Trading with SkyWest and ANA Holdings

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

The idea behind SkyWest and ANA Holdings ADR 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..