Correlation Between Sun Country and Gol Linhas
Can any of the company-specific risk be diversified away by investing in both Sun Country and Gol Linhas 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 Gol Linhas 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 Gol Linhas Aereas, you can compare the effects of market volatilities on Sun Country and Gol Linhas 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 Gol Linhas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Gol Linhas.
Diversification Opportunities for Sun Country and Gol Linhas
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Gol is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Gol Linhas Aereas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gol Linhas Aereas 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 Gol Linhas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gol Linhas Aereas has no effect on the direction of Sun Country i.e., Sun Country and Gol Linhas go up and down completely randomly.
Pair Corralation between Sun Country and Gol Linhas
Given the investment horizon of 90 days Sun Country Airlines is expected to under-perform the Gol Linhas. But the stock apears to be less risky and, when comparing its historical volatility, Sun Country Airlines is 1.69 times less risky than Gol Linhas. The stock trades about -0.01 of its potential returns per unit of risk. The Gol Linhas Aereas is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 290.00 in Gol Linhas Aereas on August 24, 2024 and sell it today you would earn a total of 148.00 from holding Gol Linhas Aereas or generate 51.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 32.12% |
| Values | Daily Returns |
Sun Country Airlines vs. Gol Linhas Aereas
Performance |
| Timeline |
| Sun Country Airlines |
| Gol Linhas Aereas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sun Country and Gol Linhas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Gol Linhas
The main advantage of trading using opposite Sun Country and Gol Linhas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Gol Linhas 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 Gol Linhas will offset losses from the drop in Gol Linhas' long position.| Sun Country vs. Spirit Airlines | Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA |
| Gol Linhas vs. Azul SA | Gol Linhas vs. Air France KLM | Gol Linhas vs. Copa Holdings SA | Gol Linhas vs. International Consolidated Airlines |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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