Correlation Between SkyWest and Haverty Furniture

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

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

Diversification Opportunities for SkyWest and Haverty Furniture

-0.81

Correlation Coefficient

SkyWest  Haverty Furniture

Pay attention - limited upside

The 3 months correlation between SkyWest and Haverty is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Haverty Furniture Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haverty Furniture 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 Haverty Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haverty Furniture has no effect on the direction of SkyWest i.e., SkyWest and Haverty Furniture go up and down completely randomly.

Pair Corralation between SkyWest and Haverty Furniture

Given the investment horizon of 90 days SkyWest is expected to under-perform the Haverty Furniture. But the stock apears to be less risky and, when comparing its historical volatility, SkyWest is 1.41 times less risky than Haverty Furniture. The stock trades about -0.2 of its potential returns per unit of risk. The Haverty Furniture Companies is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,255  in Haverty Furniture Companies on September 20, 2024 and sell it today you would lose (100.00) from holding Haverty Furniture Companies or give up 4.43% of portfolio value over 90 days.

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

SkyWest  vs.  Haverty Furniture Companies

SkyWest

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 14 (%) 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.

Haverty Furniture

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SkyWest and Haverty Furniture

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

The idea behind SkyWest and Haverty Furniture Companies 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..