Correlation Between Commonwealth Bank and Sun Country
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank 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 Commonwealth Bank and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank of and Sun Country Airlines, you can compare the effects of market volatilities on Commonwealth Bank 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 Commonwealth Bank with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Sun Country.
Diversification Opportunities for Commonwealth Bank and Sun Country
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commonwealth and Sun is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of 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 Commonwealth Bank 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 Commonwealth Bank of 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 Commonwealth Bank i.e., Commonwealth Bank and Sun Country go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Sun Country
Assuming the 90 days horizon Commonwealth Bank is expected to generate 5.11 times less return on investment than Sun Country. But when comparing it to its historical volatility, Commonwealth Bank of is 2.73 times less risky than Sun Country. It trades about 0.08 of its potential returns per unit of risk. Sun Country Airlines is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,117 in Sun Country Airlines on September 12, 2024 and sell it today you would earn a total of 396.00 from holding Sun Country Airlines or generate 35.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Commonwealth Bank of vs. Sun Country Airlines
Performance |
| Timeline |
| Commonwealth Bank |
| Sun Country Airlines |
Commonwealth Bank and Sun Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Sun Country
The main advantage of trading using opposite Commonwealth Bank and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank 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.| Commonwealth Bank vs. Svenska Handelsbanken PK | Commonwealth Bank vs. ANZ Group Holdings | Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. National Australia Bank |
| Sun Country vs. American Airlines Group | Sun Country vs. Southwest Airlines | Sun Country vs. United Airlines Holdings | Sun Country 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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