Correlation Between Sun Country and Blue World

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

Diversification Opportunities for Sun Country and Blue World

-0.5

Correlation Coefficient

Sun Country  Blue World

Very good diversification

The 3 months correlation between Sun and Blue is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Blue World Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue World Acquisition 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 Blue World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue World Acquisition has no effect on the direction of Sun Country i.e., Sun Country and Blue World go up and down completely randomly.

Pair Corralation between Sun Country and Blue World

Given the investment horizon of 90 days Sun Country Airlines is expected to generate 0.99 times more return on investment than Blue World. However, Sun Country Airlines is 1.01 times less risky than Blue World. It trades about 0.01 of its potential returns per unit of risk. Blue World Acquisition is currently generating about -0.07 per unit of risk. If you would invest  1,867  in Sun Country Airlines on October 22, 2024 and sell it today you would lose (249.00) from holding Sun Country Airlines or give up 13.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	72.38%
Values	Daily Returns

Sun Country Airlines  vs.  Blue World Acquisition

Sun Country Airlines

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 11 (%) 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.

Blue World Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sun Country and Blue World

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

The idea behind Sun Country Airlines and Blue World Acquisition 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.