Correlation Between Sun Country and Spirit Airlines
Can any of the company-specific risk be diversified away by investing in both Sun Country and Spirit 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 Spirit 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 Spirit Airlines, you can compare the effects of market volatilities on Sun Country and Spirit 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 Spirit Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Spirit Airlines.
Diversification Opportunities for Sun Country and Spirit Airlines
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Spirit is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Spirit Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Airlines 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 Spirit Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Airlines has no effect on the direction of Sun Country i.e., Sun Country and Spirit Airlines go up and down completely randomly.
Pair Corralation between Sun Country and Spirit Airlines
Given the investment horizon of 90 days Sun Country Airlines is expected to generate 0.48 times more return on investment than Spirit Airlines. However, Sun Country Airlines is 2.06 times less risky than Spirit Airlines. It trades about -0.03 of its potential returns per unit of risk. Spirit Airlines is currently generating about -0.19 per unit of risk. If you would invest 1,412 in Sun Country Airlines on February 4, 2024 and sell it today you would lose (27.00) from holding Sun Country Airlines or give up 1.91% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Sun Country Airlines vs. Spirit Airlines
Performance |
Timeline |
Sun Country Airlines |
Spirit Airlines |
Sun Country and Spirit Airlines Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sun Country and Spirit Airlines
The main advantage of trading using opposite Sun Country and Spirit Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Spirit 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 Spirit Airlines will offset losses from the drop in Spirit Airlines' long position.Sun Country vs. Spirit Airlines | Sun Country vs. JetBlue Airways Corp | Sun Country vs. Hawaiian Holdings | Sun Country vs. Allegiant Travel |
Spirit Airlines vs. American Airlines Group | Spirit Airlines vs. Delta Air Lines | Spirit Airlines vs. Southwest Airlines | Spirit Airlines vs. United Airlines Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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