Correlation Between Sun Country and Park Hotels
Can any of the company-specific risk be diversified away by investing in both Sun Country and Park Hotels 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 Park Hotels 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 Park Hotels Resorts, you can compare the effects of market volatilities on Sun Country and Park Hotels 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 Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Park Hotels.
Diversification Opportunities for Sun Country and Park Hotels
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sun and Park is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Sun Country i.e., Sun Country and Park Hotels go up and down completely randomly.
Pair Corralation between Sun Country and Park Hotels
Given the investment horizon of 90 days Sun Country Airlines is expected to under-perform the Park Hotels. In addition to that, Sun Country is 1.5 times more volatile than Park Hotels Resorts. It trades about 0.0 of its total potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.05 per unit of volatility. If you would invest 980.00 in Park Hotels Resorts on August 29, 2024 and sell it today you would earn a total of 556.00 from holding Park Hotels Resorts or generate 56.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. Park Hotels Resorts
Performance |
| Timeline |
| Sun Country Airlines |
| Park Hotels Resorts |
Sun Country and Park Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Park Hotels
The main advantage of trading using opposite Sun Country and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Park Hotels 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 Park Hotels will offset losses from the drop in Park Hotels' long position.| Sun Country vs. Spirit Airlines | Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA |
| Park Hotels vs. Diamondrock Hospitality | Park Hotels vs. Ryman Hospitality Properties | Park Hotels vs. Pebblebrook Hotel Trust | Park Hotels vs. Sunstone Hotel Investors |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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