Correlation Between Sun Country and AIB Acquisition

Can any of the company-specific risk be diversified away by investing in both Sun Country and AIB Acquisition 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 AIB Acquisition 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 AIB Acquisition Corp, you can compare the effects of market volatilities on Sun Country and AIB Acquisition 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 AIB Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and AIB Acquisition.

Diversification Opportunities for Sun Country and AIB Acquisition

0.65

Correlation Coefficient

Sun Country  AIB Acquisition

Poor diversification

The 3 months correlation between Sun and AIB is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and AIB Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Acquisition Corp 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 AIB Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Acquisition Corp has no effect on the direction of Sun Country i.e., Sun Country and AIB Acquisition go up and down completely randomly.

Pair Corralation between Sun Country and AIB Acquisition

Given the investment horizon of 90 days Sun Country is expected to generate 3.21 times less return on investment than AIB Acquisition. In addition to that, Sun Country is 9.3 times more volatile than AIB Acquisition Corp. It trades about 0.0 of its total potential returns per unit of risk. AIB Acquisition Corp is currently generating about 0.14 per unit of volatility. If you would invest  1,030  in AIB Acquisition Corp on October 11, 2024 and sell it today you would earn a total of  61.00  from holding AIB Acquisition Corp or generate 5.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	25.66%
Values	Daily Returns

Sun Country Airlines  vs.  AIB Acquisition Corp

Sun Country Airlines

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 15 (%) 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.

AIB Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIB Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, AIB Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sun Country and AIB Acquisition

The main advantage of trading using opposite Sun Country and AIB Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, AIB Acquisition 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 AIB Acquisition will offset losses from the drop in AIB Acquisition's long position.

The idea behind Sun Country Airlines and AIB Acquisition Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.