Correlation Between SkyWest and Genesis Growth

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

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

Diversification Opportunities for SkyWest and Genesis Growth

0.0

Correlation Coefficient

SkyWest  Genesis Growth

Pay attention - limited upside

The 3 months correlation between SkyWest and Genesis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Genesis Growth Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Growth Tech 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 Genesis Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Growth Tech has no effect on the direction of SkyWest i.e., SkyWest and Genesis Growth go up and down completely randomly.

Pair Corralation between SkyWest and Genesis Growth

Given the investment horizon of 90 days SkyWest is expected to generate 1.46 times more return on investment than Genesis Growth. However, SkyWest is 1.46 times more volatile than Genesis Growth Tech. It trades about 0.17 of its potential returns per unit of risk. Genesis Growth Tech is currently generating about 0.07 per unit of risk. If you would invest  1,839  in SkyWest on October 5, 2024 and sell it today you would earn a total of  8,269  from holding SkyWest or generate 449.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	52.31%
Values	Daily Returns

SkyWest  vs.  Genesis Growth Tech

SkyWest

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 10 (%) 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.

Genesis Growth Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Growth Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Genesis Growth is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SkyWest and Genesis Growth

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

The idea behind SkyWest and Genesis Growth Tech 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.