Correlation Between Sun Country and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both Sun Country and Western Acquisition 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 Western Acquisition 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 Western Acquisition Ventures, you can compare the effects of market volatilities on Sun Country and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Western Acquisition.
Diversification Opportunities for Sun Country and Western Acquisition
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sun and Western is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Sun Country i.e., Sun Country and Western Acquisition go up and down completely randomly.
Pair Corralation between Sun Country and Western Acquisition
Given the investment horizon of 90 days Sun Country Airlines is expected to generate 1.64 times more return on investment than Western Acquisition. However, Sun Country is 1.64 times more volatile than Western Acquisition Ventures. It trades about 0.14 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.05 per unit of risk. If you would invest 1,131 in Sun Country Airlines on August 28, 2024 and sell it today you would earn a total of 262.00 from holding Sun Country Airlines or generate 23.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. Western Acquisition Ventures
Performance |
| Timeline |
| Sun Country Airlines |
| Western Acquisition |
Sun Country and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Western Acquisition
The main advantage of trading using opposite Sun Country and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition's long position.| Sun Country vs. Spirit Airlines | Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA |
| Western Acquisition vs. Aurora Innovation | Western Acquisition vs. HUMANA INC | Western Acquisition vs. Aquagold International | Western Acquisition vs. Barloworld Ltd ADR |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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