Correlation Between Global Crossing and SkyWest

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

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

Diversification Opportunities for Global Crossing and SkyWest

-0.05

Correlation Coefficient

Global Crossing  SkyWest

Good diversification

The 3 months correlation between Global and SkyWest is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Global Crossing Airlines and SkyWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyWest and Global Crossing 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 Global Crossing Airlines 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 Global Crossing i.e., Global Crossing and SkyWest go up and down completely randomly.

Pair Corralation between Global Crossing and SkyWest

Assuming the 90 days horizon Global Crossing Airlines is expected to generate 2.11 times more return on investment than SkyWest. However, Global Crossing is 2.11 times more volatile than SkyWest. It trades about 0.11 of its potential returns per unit of risk. SkyWest is currently generating about 0.16 per unit of risk. If you would invest  50.00  in Global Crossing Airlines on January 28, 2024 and sell it today you would earn a total of  4.00  from holding Global Crossing Airlines or generate 8.0% return on investment over 90 days.

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

Global Crossing Airlines  vs.  SkyWest

Global Crossing Airlines

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Crossing Airlines are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Global Crossing may actually be approaching a critical reversion point that can send shares even higher in May 2024.

SkyWest

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SkyWest are ranked lower than 20 (%) 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.

Pair Trading with Global Crossing and SkyWest

The main advantage of trading using opposite Global Crossing and SkyWest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Crossing 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 Global Crossing Airlines 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 Stocks Directory module to find actively traded stocks across global markets.