Correlation Between American Axle and Sun Country
Can any of the company-specific risk be diversified away by investing in both American Axle 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 American Axle and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Axle Manufacturing and Sun Country Airlines, you can compare the effects of market volatilities on American Axle 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 American Axle with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Sun Country.
Diversification Opportunities for American Axle and Sun Country
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Sun is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing 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 American Axle 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 American Axle Manufacturing 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 American Axle i.e., American Axle and Sun Country go up and down completely randomly.
Pair Corralation between American Axle and Sun Country
Considering the 90-day investment horizon American Axle Manufacturing is expected to under-perform the Sun Country. But the stock apears to be less risky and, when comparing its historical volatility, American Axle Manufacturing is 1.37 times less risky than Sun Country. The stock trades about -0.03 of its potential returns per unit of risk. The Sun Country Airlines is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,084 in Sun Country Airlines on September 2, 2024 and sell it today you would earn a total of 355.00 from holding Sun Country Airlines or generate 32.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. Sun Country Airlines
Performance |
| Timeline |
| American Axle Manufa |
| Sun Country Airlines |
American Axle and Sun Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Sun Country
The main advantage of trading using opposite American Axle and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle 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.| American Axle vs. Ford Motor | American Axle vs. General Motors | American Axle vs. Goodyear Tire Rubber | American Axle vs. Li Auto |
| Sun Country vs. Canadian Pacific Railway | Sun Country vs. Werner Enterprises | Sun Country vs. Canadian National Railway | Sun Country vs. CSX Corporation |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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