Correlation Between Sun Country and Paysafe
Can any of the company-specific risk be diversified away by investing in both Sun Country and Paysafe 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 Paysafe 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 Paysafe, you can compare the effects of market volatilities on Sun Country and Paysafe 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 Paysafe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Paysafe.
Diversification Opportunities for Sun Country and Paysafe
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sun and Paysafe is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Paysafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe 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 Paysafe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysafe has no effect on the direction of Sun Country i.e., Sun Country and Paysafe go up and down completely randomly.
Pair Corralation between Sun Country and Paysafe
Given the investment horizon of 90 days Sun Country Airlines is expected to generate 0.64 times more return on investment than Paysafe. However, Sun Country Airlines is 1.57 times less risky than Paysafe. It trades about 0.14 of its potential returns per unit of risk. Paysafe is currently generating about -0.12 per unit of risk. If you would invest 1,233 in Sun Country Airlines on August 25, 2024 and sell it today you would earn a total of 140.00 from holding Sun Country Airlines or generate 11.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. Paysafe
Performance |
| Timeline |
| Sun Country Airlines |
| Paysafe |
Sun Country and Paysafe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Paysafe
The main advantage of trading using opposite Sun Country and Paysafe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Paysafe 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 Paysafe will offset losses from the drop in Paysafe's long position.The idea behind Sun Country Airlines and Paysafe pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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