Correlation Between RXO and Sky Harbour

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

By analyzing existing cross correlation between RXO Inc and Sky Harbour Group, you can compare the effects of market volatilities on RXO and Sky Harbour 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 RXO with a short position of Sky Harbour. Check out your portfolio center. Please also check ongoing floating volatility patterns of RXO and Sky Harbour.

Diversification Opportunities for RXO and Sky Harbour

-0.42

Correlation Coefficient

RXO  Sky Harbour

Very good diversification

The 3 months correlation between RXO and Sky is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding RXO Inc and Sky Harbour Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sky Harbour Group and RXO 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 RXO Inc are associated (or correlated) with Sky Harbour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sky Harbour Group has no effect on the direction of RXO i.e., RXO and Sky Harbour go up and down completely randomly.

Pair Corralation between RXO and Sky Harbour

Considering the 90-day investment horizon RXO Inc is expected to generate 0.55 times more return on investment than Sky Harbour. However, RXO Inc is 1.83 times less risky than Sky Harbour. It trades about 0.05 of its potential returns per unit of risk. Sky Harbour Group is currently generating about 0.0 per unit of risk. If you would invest  2,906  in RXO Inc on August 31, 2024 and sell it today you would earn a total of  83.00  from holding RXO Inc or generate 2.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

RXO Inc  vs.  Sky Harbour Group

RXO Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RXO Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, RXO may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Sky Harbour Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sky Harbour Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Sky Harbour unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RXO and Sky Harbour

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

The idea behind RXO Inc and Sky Harbour 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.