Correlation Between Sun Country and PS Business
Can any of the company-specific risk be diversified away by investing in both Sun Country and PS Business 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 PS Business 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 PS Business Parks, you can compare the effects of market volatilities on Sun Country and PS Business 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 PS Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and PS Business.
Diversification Opportunities for Sun Country and PS Business
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and PSBXP is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and PS Business Parks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PS Business Parks 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 PS Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PS Business Parks has no effect on the direction of Sun Country i.e., Sun Country and PS Business go up and down completely randomly.
Pair Corralation between Sun Country and PS Business
Given the investment horizon of 90 days Sun Country is expected to generate 1.98 times less return on investment than PS Business. But when comparing it to its historical volatility, Sun Country Airlines is 1.14 times less risky than PS Business. It trades about 0.01 of its potential returns per unit of risk. PS Business Parks is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,341 in PS Business Parks on September 14, 2024 and sell it today you would earn a total of 59.00 from holding PS Business Parks or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 28.95% |
| Values | Daily Returns |
Sun Country Airlines vs. PS Business Parks
Performance |
| Timeline |
| Sun Country Airlines |
| PS Business Parks |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sun Country and PS Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and PS Business
The main advantage of trading using opposite Sun Country and PS Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, PS Business 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 PS Business will offset losses from the drop in PS Business' long position.| Sun Country vs. Southwest Airlines | Sun Country vs. United Airlines Holdings | Sun Country vs. Frontier Group Holdings |
| PS Business vs. Insteel Industries | PS Business vs. Afya | PS Business vs. Sun Country Airlines | PS Business vs. Cumulus Media Class |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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