Correlation Between SkyWest and Gentera SAB

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

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

Diversification Opportunities for SkyWest and Gentera SAB

0.85

Correlation Coefficient

SkyWest  Gentera SAB

Very poor diversification

The 3 months correlation between SkyWest and Gentera is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Gentera SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentera SAB de 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 Gentera SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentera SAB de has no effect on the direction of SkyWest i.e., SkyWest and Gentera SAB go up and down completely randomly.

Pair Corralation between SkyWest and Gentera SAB

Given the investment horizon of 90 days SkyWest is expected to generate 1.09 times more return on investment than Gentera SAB. However, SkyWest is 1.09 times more volatile than Gentera SAB de. It trades about 0.28 of its potential returns per unit of risk. Gentera SAB de is currently generating about 0.13 per unit of risk. If you would invest  7,826  in SkyWest on September 13, 2024 and sell it today you would earn a total of  3,125  from holding SkyWest or generate 39.93% return on investment over 90 days.

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

SkyWest  vs.  Gentera SAB de

SkyWest

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, SkyWest showed solid returns over the last few months and may actually be approaching a breakup point.

Gentera SAB de

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gentera SAB de are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Gentera SAB reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SkyWest and Gentera SAB

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

The idea behind SkyWest and Gentera SAB de 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.