Correlation Between Merit Medical and Sun Country
Can any of the company-specific risk be diversified away by investing in both Merit Medical 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 Merit Medical and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merit Medical Systems and Sun Country Airlines, you can compare the effects of market volatilities on Merit Medical 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 Merit Medical with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Sun Country.
Diversification Opportunities for Merit Medical and Sun Country
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merit and Sun is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems 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 Merit Medical 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 Merit Medical Systems 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 Merit Medical i.e., Merit Medical and Sun Country go up and down completely randomly.
Pair Corralation between Merit Medical and Sun Country
Given the investment horizon of 90 days Merit Medical is expected to generate 1.25 times less return on investment than Sun Country. But when comparing it to its historical volatility, Merit Medical Systems is 1.52 times less risky than Sun Country. It trades about 0.42 of its potential returns per unit of risk. Sun Country Airlines is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,453 in Sun Country Airlines on November 3, 2024 and sell it today you would earn a total of 243.00 from holding Sun Country Airlines or generate 16.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Sun Country Airlines
Performance |
| Timeline |
| Merit Medical Systems |
| Sun Country Airlines |
Merit Medical and Sun Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Sun Country
The main advantage of trading using opposite Merit Medical and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical 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.| Merit Medical vs. Teleflex Incorporated | Merit Medical vs. The Cooper Companies, | Merit Medical vs. West Pharmaceutical Services | Merit Medical vs. ICU Medical |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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