Correlation Between Sun Country and SMX Public

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

Diversification Opportunities for Sun Country and SMX Public

0.43

Correlation Coefficient

Sun Country  SMX Public

Very weak diversification

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

Pair Corralation between Sun Country and SMX Public

Given the investment horizon of 90 days Sun Country Airlines is expected to under-perform the SMX Public. But the stock apears to be less risky and, when comparing its historical volatility, Sun Country Airlines is 19.99 times less risky than SMX Public. The stock trades about 0.0 of its potential returns per unit of risk. The SMX Public Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  11.00  in SMX Public Limited on October 25, 2024 and sell it today you would lose (7.80) from holding SMX Public Limited or give up 70.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	78.7%
Values	Daily Returns

Sun Country Airlines  vs.  SMX Public Limited

Sun Country Airlines

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Country Airlines are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, Sun Country showed solid returns over the last few months and may actually be approaching a breakup point.

SMX Public Limited

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SMX Public Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, SMX Public showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Country and SMX Public

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

The idea behind Sun Country Airlines and SMX Public Limited 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 Stocks Directory module to find actively traded stocks across global markets.