Correlation Between Sun Country and Freedom Bank
Can any of the company-specific risk be diversified away by investing in both Sun Country and Freedom Bank 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 Freedom Bank 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 Freedom Bank of, you can compare the effects of market volatilities on Sun Country and Freedom Bank 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 Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Freedom Bank.
Diversification Opportunities for Sun Country and Freedom Bank
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sun and Freedom is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank 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 Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of Sun Country i.e., Sun Country and Freedom Bank go up and down completely randomly.
Pair Corralation between Sun Country and Freedom Bank
Given the investment horizon of 90 days Sun Country Airlines is expected to generate 3.05 times more return on investment than Freedom Bank. However, Sun Country is 3.05 times more volatile than Freedom Bank of. It trades about 0.15 of its potential returns per unit of risk. Freedom Bank of is currently generating about 0.07 per unit of risk. If you would invest 1,117 in Sun Country Airlines on September 12, 2024 and sell it today you would earn a total of 396.00 from holding Sun Country Airlines or generate 35.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. Freedom Bank of
Performance |
| Timeline |
| Sun Country Airlines |
| Freedom Bank |
Sun Country and Freedom Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Freedom Bank
The main advantage of trading using opposite Sun Country and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Freedom Bank 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 Freedom Bank will offset losses from the drop in Freedom Bank's long position.| Sun Country vs. American Airlines Group | Sun Country vs. Southwest Airlines | Sun Country vs. United Airlines Holdings | Sun Country vs. Frontier Group Holdings |
| Freedom Bank vs. National Capital Bank | Freedom Bank vs. Community Heritage Financial | Freedom Bank vs. Citizens Financial Corp | Freedom Bank vs. Bank of Idaho |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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