Correlation Between Sun Country and Starbucks
Can any of the company-specific risk be diversified away by investing in both Sun Country and Starbucks 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 Starbucks 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 Starbucks, you can compare the effects of market volatilities on Sun Country and Starbucks 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 Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Starbucks.
Diversification Opportunities for Sun Country and Starbucks
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Starbucks is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Sun Country i.e., Sun Country and Starbucks go up and down completely randomly.
Pair Corralation between Sun Country and Starbucks
Given the investment horizon of 90 days Sun Country Airlines is expected to under-perform the Starbucks. In addition to that, Sun Country is 2.1 times more volatile than Starbucks. It trades about 0.0 of its total potential returns per unit of risk. Starbucks is currently generating about 0.16 per unit of volatility. If you would invest 9,643 in Starbucks on September 5, 2024 and sell it today you would earn a total of 427.00 from holding Starbucks or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. Starbucks
Performance |
| Timeline |
| Sun Country Airlines |
| Starbucks |
Sun Country and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Starbucks
The main advantage of trading using opposite Sun Country and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' long position.| Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA | Sun Country vs. SkyWest |
| Starbucks vs. Hyatt Hotels | Starbucks vs. Smart Share Global | Starbucks vs. Wyndham Hotels Resorts | Starbucks vs. WW International |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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