Correlation Between Sun Country and Everest

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

Diversification Opportunities for Sun Country and Everest

-0.45

Correlation Coefficient

Sun Country  Everest

Very good diversification

The 3 months correlation between Sun and Everest is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Everest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everest Group 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 Everest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everest Group has no effect on the direction of Sun Country i.e., Sun Country and Everest go up and down completely randomly.

Pair Corralation between Sun Country and Everest

Given the investment horizon of 90 days Sun Country Airlines is expected to under-perform the Everest. In addition to that, Sun Country is 2.25 times more volatile than Everest Group. It trades about -0.04 of its total potential returns per unit of risk. Everest Group is currently generating about 0.02 per unit of volatility. If you would invest  35,794  in Everest Group on December 27, 2024 and sell it today you would earn a total of  431.00  from holding Everest Group or generate 1.2% return on investment over 90 days.

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

Sun Country Airlines  vs.  Everest Group

Sun Country Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Country Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Everest Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everest Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Everest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sun Country and Everest

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

The idea behind Sun Country Airlines and Everest Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.