Correlation Between Sun Country and Xponential Fitness

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

Diversification Opportunities for Sun Country and Xponential Fitness

0.71

Correlation Coefficient

Sun Country  Xponential Fitness

Poor diversification

The 3 months correlation between Sun and Xponential is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness 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 Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Sun Country i.e., Sun Country and Xponential Fitness go up and down completely randomly.

Pair Corralation between Sun Country and Xponential Fitness

Given the investment horizon of 90 days Sun Country is expected to generate 1.07 times less return on investment than Xponential Fitness. But when comparing it to its historical volatility, Sun Country Airlines is 1.68 times less risky than Xponential Fitness. It trades about 0.01 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,268  in Xponential Fitness on September 21, 2024 and sell it today you would lose (889.00) from holding Xponential Fitness or give up 39.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Sun Country Airlines  vs.  Xponential Fitness

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.

Xponential Fitness

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Xponential Fitness reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sun Country and Xponential Fitness

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

The idea behind Sun Country Airlines and Xponential Fitness 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.