Correlation Between SkyWest and Sligro Food

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

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

Diversification Opportunities for SkyWest and Sligro Food

-0.5

Correlation Coefficient

SkyWest  Sligro Food

Very good diversification

The 3 months correlation between SkyWest and Sligro is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food Group 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 Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of SkyWest i.e., SkyWest and Sligro Food go up and down completely randomly.

Pair Corralation between SkyWest and Sligro Food

Given the investment horizon of 90 days SkyWest is expected to generate 0.86 times more return on investment than Sligro Food. However, SkyWest is 1.16 times less risky than Sligro Food. It trades about -0.12 of its potential returns per unit of risk. Sligro Food Group is currently generating about -0.15 per unit of risk. If you would invest  11,242  in SkyWest on October 7, 2024 and sell it today you would lose (869.00) from holding SkyWest or give up 7.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.35%
Values	Daily Returns

SkyWest  vs.  Sligro Food Group

SkyWest

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 12 (%) 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.

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SkyWest and Sligro Food

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

The idea behind SkyWest and Sligro Food Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.