Correlation Between SkyWest and Bakkt Holdings

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

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

Diversification Opportunities for SkyWest and Bakkt Holdings

0.27

Correlation Coefficient

SkyWest  Bakkt Holdings

Modest diversification

The 3 months correlation between SkyWest and Bakkt is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Bakkt Holdings Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakkt Holdings Warrant 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 Bakkt Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakkt Holdings Warrant has no effect on the direction of SkyWest i.e., SkyWest and Bakkt Holdings go up and down completely randomly.

Pair Corralation between SkyWest and Bakkt Holdings

Given the investment horizon of 90 days SkyWest is expected to generate 0.23 times more return on investment than Bakkt Holdings. However, SkyWest is 4.41 times less risky than Bakkt Holdings. It trades about -0.07 of its potential returns per unit of risk. Bakkt Holdings Warrant is currently generating about -0.1 per unit of risk. If you would invest  10,075  in SkyWest on December 28, 2024 and sell it today you would lose (1,199) from holding SkyWest or give up 11.9% of portfolio value over 90 days.

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

SkyWest  vs.  Bakkt Holdings Warrant

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.

Bakkt Holdings Warrant

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bakkt Holdings Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SkyWest and Bakkt Holdings

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

The idea behind SkyWest and Bakkt Holdings Warrant 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.