Correlation Between Transportadora and SkyWest

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

By analyzing existing cross correlation between Transportadora de Gas and SkyWest, you can compare the effects of market volatilities on Transportadora and SkyWest 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 Transportadora with a short position of SkyWest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and SkyWest.

Diversification Opportunities for Transportadora and SkyWest

0.84

Correlation Coefficient

Transportadora  SkyWest

Very poor diversification

The 3 months correlation between Transportadora and SkyWest is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and SkyWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyWest and Transportadora 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 Transportadora de Gas are associated (or correlated) with SkyWest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkyWest has no effect on the direction of Transportadora i.e., Transportadora and SkyWest go up and down completely randomly.

Pair Corralation between Transportadora and SkyWest

Considering the 90-day investment horizon Transportadora de Gas is expected to generate 1.39 times more return on investment than SkyWest. However, Transportadora is 1.39 times more volatile than SkyWest. It trades about 0.21 of its potential returns per unit of risk. SkyWest is currently generating about 0.25 per unit of risk. If you would invest  2,131  in Transportadora de Gas on September 14, 2024 and sell it today you would earn a total of  886.00  from holding Transportadora de Gas or generate 41.58% return on investment over 90 days.

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

Transportadora de Gas  vs.  SkyWest

Transportadora de Gas

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Transportadora unveiled solid returns over the last few months and may actually be approaching a breakup point.

SkyWest

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, SkyWest showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transportadora and SkyWest

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

The idea behind Transportadora de Gas and SkyWest 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.