Correlation Between Sun Country and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Sun Country and Ambev SA 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 Sun Country and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Country Airlines and Ambev SA ADR, you can compare the effects of market volatilities on Sun Country and Ambev SA 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 Sun Country with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Ambev SA.
Diversification Opportunities for Sun Country and Ambev SA
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sun and Ambev is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Ambev SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA ADR and Sun Country 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 Sun Country Airlines are associated (or correlated) with Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA ADR has no effect on the direction of Sun Country i.e., Sun Country and Ambev SA go up and down completely randomly.
Pair Corralation between Sun Country and Ambev SA
Given the investment horizon of 90 days Sun Country Airlines is expected to generate 1.37 times more return on investment than Ambev SA. However, Sun Country is 1.37 times more volatile than Ambev SA ADR. It trades about 0.01 of its potential returns per unit of risk. Ambev SA ADR is currently generating about -0.55 per unit of risk. If you would invest 1,432 in Sun Country Airlines on October 7, 2024 and sell it today you would earn a total of 1.00 from holding Sun Country Airlines or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. Ambev SA ADR
Performance |
| Timeline |
| Sun Country Airlines |
| Ambev SA ADR |
Sun Country and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Ambev SA
The main advantage of trading using opposite Sun Country and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA | Sun Country vs. SkyWest |
| Ambev SA vs. Fomento Economico Mexicano | Ambev SA vs. Boston Beer | Ambev SA vs. Carlsberg AS | Ambev SA vs. Compania Cervecerias Unidas |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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