Correlation Between Sun Country and Fortrea Holdings
Can any of the company-specific risk be diversified away by investing in both Sun Country and Fortrea Holdings 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 Fortrea Holdings 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 Fortrea Holdings, you can compare the effects of market volatilities on Sun Country and Fortrea Holdings 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 Fortrea Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Fortrea Holdings.
Diversification Opportunities for Sun Country and Fortrea Holdings
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sun and Fortrea is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Fortrea Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortrea Holdings 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 Fortrea Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortrea Holdings has no effect on the direction of Sun Country i.e., Sun Country and Fortrea Holdings go up and down completely randomly.
Pair Corralation between Sun Country and Fortrea Holdings
Given the investment horizon of 90 days Sun Country Airlines is expected to generate 0.85 times more return on investment than Fortrea Holdings. However, Sun Country Airlines is 1.17 times less risky than Fortrea Holdings. It trades about 0.01 of its potential returns per unit of risk. Fortrea Holdings is currently generating about -0.04 per unit of risk. If you would invest 1,614 in Sun Country Airlines on September 14, 2024 and sell it today you would lose (125.00) from holding Sun Country Airlines or give up 7.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. Fortrea Holdings
Performance |
| Timeline |
| Sun Country Airlines |
| Fortrea Holdings |
Sun Country and Fortrea Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Fortrea Holdings
The main advantage of trading using opposite Sun Country and Fortrea Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Fortrea Holdings 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 Fortrea Holdings will offset losses from the drop in Fortrea Holdings' long position.| Sun Country vs. Southwest Airlines | Sun Country vs. United Airlines Holdings | Sun Country vs. Frontier Group Holdings |
| Fortrea Holdings vs. Aquestive Therapeutics | Fortrea Holdings vs. Tandem Diabetes Care | Fortrea Holdings vs. Zhihu Inc ADR | Fortrea Holdings vs. Amgen Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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