Correlation Between Sun Country and United Airlines
Can any of the company-specific risk be diversified away by investing in both Sun Country and United Airlines 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 United Airlines 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 United Airlines Holdings, you can compare the effects of market volatilities on Sun Country and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and United Airlines.
Diversification Opportunities for Sun Country and United Airlines
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sun and United is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Sun Country i.e., Sun Country and United Airlines go up and down completely randomly.
Pair Corralation between Sun Country and United Airlines
Given the investment horizon of 90 days Sun Country is expected to generate 2.34 times less return on investment than United Airlines. In addition to that, Sun Country is 1.4 times more volatile than United Airlines Holdings. It trades about 0.12 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.41 per unit of volatility. If you would invest 7,345 in United Airlines Holdings on August 24, 2024 and sell it today you would earn a total of 2,095 from holding United Airlines Holdings or generate 28.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. United Airlines Holdings
Performance |
| Timeline |
| Sun Country Airlines |
| United Airlines Holdings |
Sun Country and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and United Airlines
The main advantage of trading using opposite Sun Country and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| Sun Country vs. Spirit Airlines | Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA |
| United Airlines vs. Delta Air Lines | United Airlines vs. Southwest Airlines | United Airlines vs. JetBlue Airways Corp | United Airlines vs. Spirit Airlines |
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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