Correlation Between Sun Country and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Sun Country and Electronic Arts 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 Electronic Arts 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 Electronic Arts, you can compare the effects of market volatilities on Sun Country and Electronic Arts 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 Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Electronic Arts.
Diversification Opportunities for Sun Country and Electronic Arts
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Electronic is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts 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 Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of Sun Country i.e., Sun Country and Electronic Arts go up and down completely randomly.
Pair Corralation between Sun Country and Electronic Arts
Given the investment horizon of 90 days Sun Country is expected to generate 2.19 times less return on investment than Electronic Arts. In addition to that, Sun Country is 3.71 times more volatile than Electronic Arts. It trades about 0.08 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.65 per unit of volatility. If you would invest 14,418 in Electronic Arts on August 27, 2024 and sell it today you would earn a total of 2,249 from holding Electronic Arts or generate 15.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. Electronic Arts
Performance |
| Timeline |
| Sun Country Airlines |
| Electronic Arts |
Sun Country and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Electronic Arts
The main advantage of trading using opposite Sun Country and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.| Sun Country vs. Spirit Airlines | Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA |
| Electronic Arts vs. Playstudios | Electronic Arts vs. Talkspace | Electronic Arts vs. Katapult Holdings Equity | Electronic Arts vs. Aquagold International |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |