Correlation Between Royalty Management and Sun Country

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

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

Diversification Opportunities for Royalty Management and Sun Country

0.79

Correlation Coefficient

Royalty Management  Sun Country

Poor diversification

The 3 months correlation between Royalty and Sun is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Royalty Management Holding 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 Royalty Management 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 Royalty Management Holding 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 Royalty Management i.e., Royalty Management and Sun Country go up and down completely randomly.

Pair Corralation between Royalty Management and Sun Country

Given the investment horizon of 90 days Royalty Management is expected to generate 1.28 times less return on investment than Sun Country. In addition to that, Royalty Management is 1.37 times more volatile than Sun Country Airlines. It trades about 0.07 of its total potential returns per unit of risk. Sun Country Airlines is currently generating about 0.12 per unit of volatility. If you would invest  1,098  in Sun Country Airlines on September 3, 2024 and sell it today you would earn a total of  296.00  from holding Sun Country Airlines or generate 26.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Royalty Management Holding  vs.  Sun Country Airlines

Royalty Management

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Royalty Management Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Royalty Management displayed solid returns over the last few months and may actually be approaching a breakup point.

Sun Country Airlines

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Sun Country showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Royalty Management and Sun Country

The main advantage of trading using opposite Royalty Management and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royalty Management 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 Royalty Management Holding 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.