Correlation Between Under Armour and Sun Country

Can any of the company-specific risk be diversified away by investing in both Under Armour and Sun Country 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 Under Armour and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Under Armour C and Sun Country Airlines, you can compare the effects of market volatilities on Under Armour and Sun Country 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 Under Armour with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Sun Country.

Diversification Opportunities for Under Armour and Sun Country

0.4

Correlation Coefficient

Under Armour  Sun Country

Very weak diversification

The 3 months correlation between Under and Sun is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and Sun Country Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Country Airlines and Under Armour 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 Under Armour C are associated (or correlated) with Sun Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Country Airlines has no effect on the direction of Under Armour i.e., Under Armour and Sun Country go up and down completely randomly.

Pair Corralation between Under Armour and Sun Country

Allowing for the 90-day total investment horizon Under Armour is expected to generate 2.64 times less return on investment than Sun Country. But when comparing it to its historical volatility, Under Armour C is 1.09 times less risky than Sun Country. It trades about 0.0 of its potential returns per unit of risk. Sun Country Airlines is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,593  in Sun Country Airlines on September 24, 2024 and sell it today you would lose (107.00) from holding Sun Country Airlines or give up 6.72% of portfolio value over 90 days.

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

Under Armour C  vs.  Sun Country Airlines

Under Armour C

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour C are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Under Armour may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Under Armour and Sun Country

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

The idea behind Under Armour C and Sun Country Airlines 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .