Correlation Between Stepstone and Sun Country
Can any of the company-specific risk be diversified away by investing in both Stepstone and Sun Country 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 Stepstone and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Sun Country Airlines, you can compare the effects of market volatilities on Stepstone and Sun Country 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 Stepstone with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Sun Country.
Diversification Opportunities for Stepstone and Sun Country
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stepstone and Sun is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Sun Country Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Country Airlines and Stepstone 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 Stepstone Group are associated (or correlated) with Sun Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Country Airlines has no effect on the direction of Stepstone i.e., Stepstone and Sun Country go up and down completely randomly.
Pair Corralation between Stepstone and Sun Country
Given the investment horizon of 90 days Stepstone Group is expected to generate 0.69 times more return on investment than Sun Country. However, Stepstone Group is 1.45 times less risky than Sun Country. It trades about 0.1 of its potential returns per unit of risk. Sun Country Airlines is currently generating about 0.0 per unit of risk. If you would invest 2,661 in Stepstone Group on September 3, 2024 and sell it today you would earn a total of 3,928 from holding Stepstone Group or generate 147.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Sun Country Airlines
Performance |
| Timeline |
| Stepstone Group |
| Sun Country Airlines |
Stepstone and Sun Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Sun Country
The main advantage of trading using opposite Stepstone and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone position performs unexpectedly, Sun Country 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 Sun Country will offset losses from the drop in Sun Country's long position.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| Sun Country vs. Copa Holdings SA | Sun Country vs. SkyWest | Sun Country vs. Air Transport Services | Sun Country vs. Mesa Air Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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