Correlation Between Sun Country and Stepstone
Can any of the company-specific risk be diversified away by investing in both Sun Country and Stepstone 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 Stepstone 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 Stepstone Group, you can compare the effects of market volatilities on Sun Country and Stepstone 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 Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Stepstone.
Diversification Opportunities for Sun Country and Stepstone
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Stepstone is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Sun Country i.e., Sun Country and Stepstone go up and down completely randomly.
Pair Corralation between Sun Country and Stepstone
Given the investment horizon of 90 days Sun Country is expected to generate 1.2 times less return on investment than Stepstone. In addition to that, Sun Country is 1.66 times more volatile than Stepstone Group. It trades about 0.09 of its total potential returns per unit of risk. Stepstone Group is currently generating about 0.17 per unit of volatility. If you would invest 4,274 in Stepstone Group on September 3, 2024 and sell it today you would earn a total of 2,315 from holding Stepstone Group or generate 54.16% 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. Stepstone Group
Performance |
| Timeline |
| Sun Country Airlines |
| Stepstone Group |
Sun Country and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Stepstone
The main advantage of trading using opposite Sun Country and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Stepstone 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 Stepstone will offset losses from the drop in Stepstone's long position.| Sun Country vs. Copa Holdings SA | Sun Country vs. SkyWest | Sun Country vs. Air Transport Services | Sun Country vs. Mesa Air Group |
| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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