Correlation Between Sun Country and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Sun Country and Naked Wines 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 Naked Wines 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 Naked Wines plc, you can compare the effects of market volatilities on Sun Country and Naked Wines 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 Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Naked Wines.
Diversification Opportunities for Sun Country and Naked Wines
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sun and Naked is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Naked Wines plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines plc 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 Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines plc has no effect on the direction of Sun Country i.e., Sun Country and Naked Wines go up and down completely randomly.
Pair Corralation between Sun Country and Naked Wines
Given the investment horizon of 90 days Sun Country Airlines is expected to generate 2.4 times more return on investment than Naked Wines. However, Sun Country is 2.4 times more volatile than Naked Wines plc. It trades about 0.16 of its potential returns per unit of risk. Naked Wines plc is currently generating about 0.21 per unit of risk. If you would invest 1,278 in Sun Country Airlines on August 31, 2024 and sell it today you would earn a total of 164.00 from holding Sun Country Airlines or generate 12.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. Naked Wines plc
Performance |
| Timeline |
| Sun Country Airlines |
| Naked Wines plc |
Sun Country and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Naked Wines
The main advantage of trading using opposite Sun Country and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Naked Wines 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 Naked Wines will offset losses from the drop in Naked Wines' long position.| Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. SkyWest | Sun Country vs. Air Transport Services |
| Naked Wines vs. Diageo PLC ADR | Naked Wines vs. Pernod Ricard SA | Naked Wines vs. Constellation Brands Class | Naked Wines vs. Brown Forman |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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