Correlation Between Sun Country and Agere Systems

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

Diversification Opportunities for Sun Country and Agere Systems

0.0

Correlation Coefficient

Sun Country  Agere Systems

Pay attention - limited upside

The 3 months correlation between Sun and Agere is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Agere Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agere Systems 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 Agere Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agere Systems has no effect on the direction of Sun Country i.e., Sun Country and Agere Systems go up and down completely randomly.

Pair Corralation between Sun Country and Agere Systems

If you would invest (100.00) in Agere Systems on January 30, 2024 and sell it today you would earn a total of  100.00  from holding Agere Systems or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sun Country Airlines  vs.  Agere Systems

Sun Country Airlines

Risk-Adjusted Performance

0 of 100

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 fairly strong fundamental indicators, Sun Country is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Agere Systems

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sun Country and Agere Systems

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

The idea behind Sun Country Airlines and Agere Systems 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.