Correlation Between SkyWest and Climb Bio

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

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

Diversification Opportunities for SkyWest and Climb Bio

-0.23

Correlation Coefficient

SkyWest  Climb Bio

Very good diversification

The 3 months correlation between SkyWest and Climb is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Climb Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Climb Bio 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 Climb Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Climb Bio has no effect on the direction of SkyWest i.e., SkyWest and Climb Bio go up and down completely randomly.

Pair Corralation between SkyWest and Climb Bio

Given the investment horizon of 90 days SkyWest is expected to generate 0.25 times more return on investment than Climb Bio. However, SkyWest is 4.02 times less risky than Climb Bio. It trades about 0.1 of its potential returns per unit of risk. Climb Bio is currently generating about -0.26 per unit of risk. If you would invest  10,693  in SkyWest on October 11, 2024 and sell it today you would earn a total of  411.00  from holding SkyWest or generate 3.84% return on investment over 90 days.

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

SkyWest  vs.  Climb Bio

SkyWest

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 12 (%) 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.

Climb Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Climb Bio 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 very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with SkyWest and Climb Bio

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

The idea behind SkyWest and Climb Bio 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.