Correlation Between SkyWest and Aimfinity Investment

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

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

Diversification Opportunities for SkyWest and Aimfinity Investment

0.53

Correlation Coefficient

SkyWest  Aimfinity Investment

Very weak diversification

The 3 months correlation between SkyWest and Aimfinity is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Aimfinity Investment I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimfinity Investment 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 Aimfinity Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aimfinity Investment has no effect on the direction of SkyWest i.e., SkyWest and Aimfinity Investment go up and down completely randomly.

Pair Corralation between SkyWest and Aimfinity Investment

Given the investment horizon of 90 days SkyWest is expected to generate 2.05 times more return on investment than Aimfinity Investment. However, SkyWest is 2.05 times more volatile than Aimfinity Investment I. It trades about 0.15 of its potential returns per unit of risk. Aimfinity Investment I is currently generating about 0.04 per unit of risk. If you would invest  4,044  in SkyWest on September 12, 2024 and sell it today you would earn a total of  6,899  from holding SkyWest or generate 170.6% return on investment over 90 days.

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

SkyWest  vs.  Aimfinity Investment I

SkyWest

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, SkyWest showed solid returns over the last few months and may actually be approaching a breakup point.

Aimfinity Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aimfinity Investment I are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Aimfinity Investment 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 Aimfinity Investment

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

The idea behind SkyWest and Aimfinity Investment I 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.