Correlation Between SkyWest and Galaxy Gaming

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

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

Diversification Opportunities for SkyWest and Galaxy Gaming

0.2

Correlation Coefficient

SkyWest  Galaxy Gaming

Modest diversification

The 3 months correlation between SkyWest and Galaxy is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Galaxy Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Gaming 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 Galaxy Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Gaming has no effect on the direction of SkyWest i.e., SkyWest and Galaxy Gaming go up and down completely randomly.

Pair Corralation between SkyWest and Galaxy Gaming

Given the investment horizon of 90 days SkyWest is expected to generate 2.71 times more return on investment than Galaxy Gaming. However, SkyWest is 2.71 times more volatile than Galaxy Gaming. It trades about 0.25 of its potential returns per unit of risk. Galaxy Gaming is currently generating about 0.07 per unit of risk. If you would invest  10,377  in SkyWest on October 26, 2024 and sell it today you would earn a total of  1,078  from holding SkyWest or generate 10.39% return on investment over 90 days.

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

SkyWest  vs.  Galaxy Gaming

SkyWest

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 11 (%) 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.

Galaxy Gaming

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Gaming are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Galaxy Gaming 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 Galaxy Gaming

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

The idea behind SkyWest and Galaxy Gaming 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.