Correlation Between SkyWest and Alliant Energy

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

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

Diversification Opportunities for SkyWest and Alliant Energy

0.14

Correlation Coefficient

SkyWest  Alliant Energy

Average diversification

The 3 months correlation between SkyWest and Alliant is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Alliant Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliant Energy Corp 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 Alliant Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliant Energy Corp has no effect on the direction of SkyWest i.e., SkyWest and Alliant Energy go up and down completely randomly.

Pair Corralation between SkyWest and Alliant Energy

Given the investment horizon of 90 days SkyWest is expected to generate 1.61 times more return on investment than Alliant Energy. However, SkyWest is 1.61 times more volatile than Alliant Energy Corp. It trades about 0.11 of its potential returns per unit of risk. Alliant Energy Corp is currently generating about 0.0 per unit of risk. If you would invest  9,558  in SkyWest on October 20, 2024 and sell it today you would earn a total of  1,371  from holding SkyWest or generate 14.34% return on investment over 90 days.

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

SkyWest  vs.  Alliant Energy Corp

SkyWest

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 8 (%) 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.

Alliant Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliant Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alliant Energy is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SkyWest and Alliant Energy

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

The idea behind SkyWest and Alliant Energy Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.