Correlation Between Xponential Fitness and Sun Country

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

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

Diversification Opportunities for Xponential Fitness and Sun Country

0.71

Correlation Coefficient

Xponential Fitness  Sun Country

Poor diversification

The 3 months correlation between Xponential and Sun is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness i.e., Xponential Fitness and Sun Country go up and down completely randomly.

Pair Corralation between Xponential Fitness and Sun Country

Given the investment horizon of 90 days Xponential Fitness is expected to generate 1.68 times more return on investment than Sun Country. However, Xponential Fitness is 1.68 times more volatile than Sun Country Airlines. It trades about 0.01 of its potential returns per unit of risk. Sun Country Airlines is currently generating about 0.01 per unit of risk. 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

Xponential Fitness  vs.  Sun Country Airlines

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.

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 Xponential Fitness and Sun Country

The main advantage of trading using opposite Xponential Fitness and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness 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 Xponential Fitness 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.