Correlation Between Sun Country and American Eagle
Can any of the company-specific risk be diversified away by investing in both Sun Country and American Eagle 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 American Eagle 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 American Eagle Outfitters, you can compare the effects of market volatilities on Sun Country and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and American Eagle.
Diversification Opportunities for Sun Country and American Eagle
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sun and American is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of Sun Country i.e., Sun Country and American Eagle go up and down completely randomly.
Pair Corralation between Sun Country and American Eagle
Given the investment horizon of 90 days Sun Country is expected to generate 2.68 times less return on investment than American Eagle. In addition to that, Sun Country is 1.19 times more volatile than American Eagle Outfitters. It trades about 0.01 of its total potential returns per unit of risk. American Eagle Outfitters is currently generating about 0.03 per unit of volatility. If you would invest 1,334 in American Eagle Outfitters on September 20, 2024 and sell it today you would earn a total of 308.00 from holding American Eagle Outfitters or generate 23.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sun Country Airlines vs. American Eagle Outfitters
Performance |
| Timeline |
| Sun Country Airlines |
| American Eagle Outfitters |
Sun Country and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and American Eagle
The main advantage of trading using opposite Sun Country and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA | Sun Country vs. SkyWest |
| American Eagle vs. Capri Holdings | American Eagle vs. Movado Group | American Eagle vs. Tapestry | American Eagle vs. Brilliant Earth Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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