Correlation Between SkyWest and Old Market

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

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

Diversification Opportunities for SkyWest and Old Market

0.21

Correlation Coefficient

SkyWest  Old Market

Modest diversification

The 3 months correlation between SkyWest and Old is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Old Market Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Market Capital 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 Old Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Market Capital has no effect on the direction of SkyWest i.e., SkyWest and Old Market go up and down completely randomly.

Pair Corralation between SkyWest and Old Market

Given the investment horizon of 90 days SkyWest is expected to under-perform the Old Market. In addition to that, SkyWest is 1.19 times more volatile than Old Market Capital. It trades about -0.04 of its total potential returns per unit of risk. Old Market Capital is currently generating about 0.04 per unit of volatility. If you would invest  593.00  in Old Market Capital on December 27, 2024 and sell it today you would earn a total of  27.00  from holding Old Market Capital or generate 4.55% 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.  Old Market Capital

SkyWest

Risk-Adjusted Performance

Very Weak

Over the last 90 days SkyWest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Old Market Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Old Market Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Old Market is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SkyWest and Old Market

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

The idea behind SkyWest and Old Market Capital 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.