Correlation Between Diageo PLC and Sun Country
Can any of the company-specific risk be diversified away by investing in both Diageo PLC 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 Diageo PLC and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diageo PLC ADR and Sun Country Airlines, you can compare the effects of market volatilities on Diageo PLC 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 Diageo PLC with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and Sun Country.
Diversification Opportunities for Diageo PLC and Sun Country
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Diageo and Sun is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR 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 Diageo PLC 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 Diageo PLC ADR 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 Diageo PLC i.e., Diageo PLC and Sun Country go up and down completely randomly.
Pair Corralation between Diageo PLC and Sun Country
Considering the 90-day investment horizon Diageo PLC ADR is expected to under-perform the Sun Country. But the stock apears to be less risky and, when comparing its historical volatility, Diageo PLC ADR is 2.95 times less risky than Sun Country. The stock trades about -0.35 of its potential returns per unit of risk. The Sun Country Airlines is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,304 in Sun Country Airlines on August 28, 2024 and sell it today you would earn a total of 101.00 from holding Sun Country Airlines or generate 7.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diageo PLC ADR vs. Sun Country Airlines
Performance |
| Timeline |
| Diageo PLC ADR |
| Sun Country Airlines |
Diageo PLC and Sun Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diageo PLC and Sun Country
The main advantage of trading using opposite Diageo PLC and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC 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.| Diageo PLC vs. Brown Forman | Diageo PLC vs. MGP Ingredients | Diageo PLC vs. Duckhorn Portfolio | Diageo PLC vs. Brown Forman |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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