Correlation Between Sun Country and First Republic
Can any of the company-specific risk be diversified away by investing in both Sun Country and First Republic 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 First Republic 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 First Republic Bank, you can compare the effects of market volatilities on Sun Country and First Republic 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 First Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and First Republic.
Diversification Opportunities for Sun Country and First Republic
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sun and First is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and First Republic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Republic 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 First Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Republic Bank has no effect on the direction of Sun Country i.e., Sun Country and First Republic go up and down completely randomly.
Pair Corralation between Sun Country and First Republic
Given the investment horizon of 90 days Sun Country Airlines is expected to under-perform the First Republic. But the stock apears to be less risky and, when comparing its historical volatility, Sun Country Airlines is 13.56 times less risky than First Republic. The stock trades about -0.01 of its potential returns per unit of risk. The First Republic Bank is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.50 in First Republic Bank on September 12, 2024 and sell it today you would lose (0.48) from holding First Republic Bank or give up 96.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 6.17% |
| Values | Daily Returns |
Sun Country Airlines vs. First Republic Bank
Performance |
| Timeline |
| Sun Country Airlines |
| First Republic Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sun Country and First Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and First Republic
The main advantage of trading using opposite Sun Country and First Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, First Republic 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 First Republic will offset losses from the drop in First Republic's long position.| Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA | Sun Country vs. SkyWest |
| First Republic vs. SunOpta | First Republic vs. Weyco Group | First Republic vs. Pool Corporation | First Republic vs. Lululemon Athletica |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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