Correlation Between Alaska Air and Sun Country
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Sun Country 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 Alaska Air and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Air Group and Sun Country Airlines, you can compare the effects of market volatilities on Alaska Air and Sun Country 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 Alaska Air with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Sun Country.
Diversification Opportunities for Alaska Air and Sun Country
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alaska and Sun is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Sun Country Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Country Airlines and Alaska Air 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 Alaska Air Group are associated (or correlated) with Sun Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Country Airlines has no effect on the direction of Alaska Air i.e., Alaska Air and Sun Country go up and down completely randomly.
Pair Corralation between Alaska Air and Sun Country
Considering the 90-day investment horizon Alaska Air Group is expected to generate 0.68 times more return on investment than Sun Country. However, Alaska Air Group is 1.46 times less risky than Sun Country. It trades about 0.06 of its potential returns per unit of risk. Sun Country Airlines is currently generating about 0.0 per unit of risk. If you would invest 3,973 in Alaska Air Group on August 27, 2024 and sell it today you would earn a total of 1,269 from holding Alaska Air Group or generate 31.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Sun Country Airlines
Performance |
| Timeline |
| Alaska Air Group |
| Sun Country Airlines |
Alaska Air and Sun Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Sun Country
The main advantage of trading using opposite Alaska Air and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Sun Country 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 Sun Country will offset losses from the drop in Sun Country's long position.| Alaska Air vs. Delta Air Lines | Alaska Air vs. United Airlines Holdings | Alaska Air vs. American Airlines Group | Alaska Air vs. JetBlue Airways Corp |
| Sun Country vs. Spirit Airlines | Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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