Correlation Between Contango ORE and Sun Country

Can any of the company-specific risk be diversified away by investing in both Contango ORE 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 Contango ORE and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Contango ORE and Sun Country Airlines, you can compare the effects of market volatilities on Contango ORE 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 Contango ORE with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contango ORE and Sun Country.

Diversification Opportunities for Contango ORE and Sun Country

-0.48

Correlation Coefficient

Contango ORE  Sun Country

Very good diversification

The 3 months correlation between Contango and Sun is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Contango ORE 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 Contango ORE 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 Contango ORE 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 Contango ORE i.e., Contango ORE and Sun Country go up and down completely randomly.

Pair Corralation between Contango ORE and Sun Country

Given the investment horizon of 90 days Contango ORE is expected to under-perform the Sun Country. In addition to that, Contango ORE is 1.89 times more volatile than Sun Country Airlines. It trades about -0.3 of its total potential returns per unit of risk. Sun Country Airlines is currently generating about 0.0 per unit of volatility. If you would invest  1,517  in Sun Country Airlines on October 9, 2024 and sell it today you would lose (12.00) from holding Sun Country Airlines or give up 0.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Contango ORE  vs.  Sun Country Airlines

Contango ORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Contango ORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sun Country Airlines

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Sun Country showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Contango ORE and Sun Country

The main advantage of trading using opposite Contango ORE and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contango ORE 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.

The idea behind Contango ORE and Sun Country Airlines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..