Correlation Between BBB Foods and Sun Country
Can any of the company-specific risk be diversified away by investing in both BBB Foods 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 BBB Foods and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Sun Country Airlines, you can compare the effects of market volatilities on BBB Foods 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 BBB Foods with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Sun Country.
Diversification Opportunities for BBB Foods and Sun Country
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BBB and Sun is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods 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 BBB Foods 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 BBB Foods 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 BBB Foods i.e., BBB Foods and Sun Country go up and down completely randomly.
Pair Corralation between BBB Foods and Sun Country
Given the investment horizon of 90 days BBB Foods is expected to generate 0.97 times more return on investment than Sun Country. However, BBB Foods is 1.03 times less risky than Sun Country. It trades about 0.09 of its potential returns per unit of risk. Sun Country Airlines is currently generating about -0.01 per unit of risk. If you would invest 1,750 in BBB Foods on August 31, 2024 and sell it today you would earn a total of 1,072 from holding BBB Foods or generate 61.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 54.81% |
| Values | Daily Returns |
BBB Foods vs. Sun Country Airlines
Performance |
| Timeline |
| BBB Foods |
| Sun Country Airlines |
BBB Foods and Sun Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and Sun Country
The main advantage of trading using opposite BBB Foods and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods 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.| BBB Foods vs. Citizens Bancorp Investment | BBB Foods vs. Stepstone Group | BBB Foods vs. Independence Realty Trust | BBB Foods vs. Western Sierra Mining |
| Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. SkyWest | Sun Country vs. Air Transport Services |
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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