Correlation Between Sun Country and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both Sun Country and CenterPoint Energy 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 CenterPoint Energy 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 CenterPoint Energy, you can compare the effects of market volatilities on Sun Country and CenterPoint Energy 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 CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and CenterPoint Energy.
Diversification Opportunities for Sun Country and CenterPoint Energy
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sun and CenterPoint is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy 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 CenterPoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CenterPoint Energy has no effect on the direction of Sun Country i.e., Sun Country and CenterPoint Energy go up and down completely randomly.
Pair Corralation between Sun Country and CenterPoint Energy
Given the investment horizon of 90 days Sun Country is expected to generate 1.21 times less return on investment than CenterPoint Energy. In addition to that, Sun Country is 2.51 times more volatile than CenterPoint Energy. It trades about 0.09 of its total potential returns per unit of risk. CenterPoint Energy is currently generating about 0.28 per unit of volatility. If you would invest 2,955 in CenterPoint Energy on August 29, 2024 and sell it today you would earn a total of 298.00 from holding CenterPoint Energy or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. CenterPoint Energy
Performance |
| Timeline |
| Sun Country Airlines |
| CenterPoint Energy |
Sun Country and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and CenterPoint Energy
The main advantage of trading using opposite Sun Country and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, CenterPoint Energy 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 CenterPoint Energy will offset losses from the drop in CenterPoint Energy's long position.| Sun Country vs. JetBlue Airways Corp | Sun Country vs. SkyWest | Sun Country vs. International Consolidated Airlines | Sun Country vs. Spirit Airlines |
| CenterPoint Energy vs. DTE Energy | CenterPoint Energy vs. Alliant Energy Corp | CenterPoint Energy vs. Ameren Corp | CenterPoint Energy vs. Pinnacle West Capital |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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