Correlation Between KINDER and Sun Country

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

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

Diversification Opportunities for KINDER and Sun Country

0.43

Correlation Coefficient

KINDER  Sun Country

Very weak diversification

The 3 months correlation between KINDER and Sun is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding KINDER MORGAN ENERGY 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 KINDER 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 KINDER MORGAN ENERGY 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 KINDER i.e., KINDER and Sun Country go up and down completely randomly.

Pair Corralation between KINDER and Sun Country

Assuming the 90 days trading horizon KINDER MORGAN ENERGY is expected to generate 0.39 times more return on investment than Sun Country. However, KINDER MORGAN ENERGY is 2.57 times less risky than Sun Country. It trades about -0.06 of its potential returns per unit of risk. Sun Country Airlines is currently generating about -0.08 per unit of risk. If you would invest  10,381  in KINDER MORGAN ENERGY on December 22, 2024 and sell it today you would lose (376.00) from holding KINDER MORGAN ENERGY or give up 3.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.33%
Values	Daily Returns

KINDER MORGAN ENERGY  vs.  Sun Country Airlines

KINDER MORGAN ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days KINDER MORGAN ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KINDER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with KINDER and Sun Country

The main advantage of trading using opposite KINDER and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINDER 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 KINDER MORGAN ENERGY 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.