Correlation Between SkyWest and Wynn Resorts
Can any of the company-specific risk be diversified away by investing in both SkyWest and Wynn Resorts 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 Wynn Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkyWest and Wynn Resorts Limited, you can compare the effects of market volatilities on SkyWest and Wynn Resorts 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 Wynn Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkyWest and Wynn Resorts.
Diversification Opportunities for SkyWest and Wynn Resorts
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SkyWest and Wynn is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Wynn Resorts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Resorts Limited 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 Wynn Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Resorts Limited has no effect on the direction of SkyWest i.e., SkyWest and Wynn Resorts go up and down completely randomly.
Pair Corralation between SkyWest and Wynn Resorts
Given the investment horizon of 90 days SkyWest is expected to generate 1.07 times more return on investment than Wynn Resorts. However, SkyWest is 1.07 times more volatile than Wynn Resorts Limited. It trades about 0.19 of its potential returns per unit of risk. Wynn Resorts Limited is currently generating about -0.21 per unit of risk. If you would invest 7,074 in SkyWest on February 6, 2024 and sell it today you would earn a total of 605.50 from holding SkyWest or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SkyWest vs. Wynn Resorts Limited
Performance |
| Timeline |
| SkyWest |
| Wynn Resorts Limited |
SkyWest and Wynn Resorts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkyWest and Wynn Resorts
The main advantage of trading using opposite SkyWest and Wynn Resorts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkyWest position performs unexpectedly, Wynn Resorts 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 Wynn Resorts will offset losses from the drop in Wynn Resorts' long position.| SkyWest vs. Copa Holdings SA | SkyWest vs. Sun Country Airlines | SkyWest vs. Air Transport Services | SkyWest vs. Frontier Group Holdings |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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