Correlation Between Eastern and Sun Country
Can any of the company-specific risk be diversified away by investing in both Eastern 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 Eastern and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and Sun Country Airlines, you can compare the effects of market volatilities on Eastern 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 Eastern with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Sun Country.
Diversification Opportunities for Eastern and Sun Country
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eastern and Sun is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co 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 Eastern 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 Eastern Co 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 Eastern i.e., Eastern and Sun Country go up and down completely randomly.
Pair Corralation between Eastern and Sun Country
Considering the 90-day investment horizon Eastern Co is expected to generate 0.86 times more return on investment than Sun Country. However, Eastern Co is 1.16 times less risky than Sun Country. It trades about 0.04 of its potential returns per unit of risk. Sun Country Airlines is currently generating about 0.01 per unit of risk. If you would invest 2,486 in Eastern Co on September 1, 2024 and sell it today you would earn a total of 386.00 from holding Eastern Co or generate 15.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Co vs. Sun Country Airlines
Performance |
| Timeline |
| Eastern |
| Sun Country Airlines |
Eastern and Sun Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and Sun Country
The main advantage of trading using opposite Eastern and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern 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.The idea behind Eastern Co and Sun Country Airlines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA | Sun Country vs. SkyWest |
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 Stocks Directory module to find actively traded stocks across global markets.
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