Correlation Between Sun Country and ENEL Societa

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

Diversification Opportunities for Sun Country and ENEL Societa

-0.63

Correlation Coefficient

Sun Country  ENEL Societa

Excellent diversification

The 3 months correlation between Sun and ENEL is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and ENEL Societa per in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENEL Societa per 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 ENEL Societa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENEL Societa per has no effect on the direction of Sun Country i.e., Sun Country and ENEL Societa go up and down completely randomly.

Pair Corralation between Sun Country and ENEL Societa

Given the investment horizon of 90 days Sun Country Airlines is expected to under-perform the ENEL Societa. In addition to that, Sun Country is 2.66 times more volatile than ENEL Societa per. It trades about -0.05 of its total potential returns per unit of risk. ENEL Societa per is currently generating about 0.18 per unit of volatility. If you would invest  686.00  in ENEL Societa per on December 26, 2024 and sell it today you would earn a total of  89.00  from holding ENEL Societa per or generate 12.97% return on investment over 90 days.

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

Sun Country Airlines  vs.  ENEL Societa per

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.

ENEL Societa per

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENEL Societa per are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, ENEL Societa showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Country and ENEL Societa

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

The idea behind Sun Country Airlines and ENEL Societa per 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.