Correlation Between Sun Country and Chewy

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

Diversification Opportunities for Sun Country and Chewy

0.43

Correlation Coefficient

Sun Country  Chewy

Very weak diversification

The 3 months correlation between Sun and Chewy is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy Inc 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 Chewy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewy Inc has no effect on the direction of Sun Country i.e., Sun Country and Chewy go up and down completely randomly.

Pair Corralation between Sun Country and Chewy

Given the investment horizon of 90 days Sun Country Airlines is expected to generate 1.32 times more return on investment than Chewy. However, Sun Country is 1.32 times more volatile than Chewy Inc. It trades about 0.14 of its potential returns per unit of risk. Chewy Inc is currently generating about 0.02 per unit of risk. If you would invest  1,122  in Sun Country Airlines on September 17, 2024 and sell it today you would earn a total of  372.00  from holding Sun Country Airlines or generate 33.16% return on investment over 90 days.

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

Sun Country Airlines  vs.  Chewy Inc

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.

Chewy Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chewy Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Chewy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sun Country and Chewy

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

The idea behind Sun Country Airlines and Chewy Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.