Correlation Between Custom Truck and SUNation Energy

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

By analyzing existing cross correlation between Custom Truck One and SUNation Energy, you can compare the effects of market volatilities on Custom Truck and SUNation Energy 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 Custom Truck with a short position of SUNation Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and SUNation Energy.

Diversification Opportunities for Custom Truck and SUNation Energy

0.13

Correlation Coefficient

Custom Truck  SUNation Energy

Average diversification

The 3 months correlation between Custom and SUNation is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and SUNation Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNation Energy and Custom Truck 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 Custom Truck One are associated (or correlated) with SUNation Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNation Energy has no effect on the direction of Custom Truck i.e., Custom Truck and SUNation Energy go up and down completely randomly.

Pair Corralation between Custom Truck and SUNation Energy

Given the investment horizon of 90 days Custom Truck One is expected to generate 0.18 times more return on investment than SUNation Energy. However, Custom Truck One is 5.47 times less risky than SUNation Energy. It trades about 0.01 of its potential returns per unit of risk. SUNation Energy is currently generating about -0.04 per unit of risk. If you would invest  493.00  in Custom Truck One on December 20, 2024 and sell it today you would lose (7.00) from holding Custom Truck One or give up 1.42% of portfolio value over 90 days.

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

Custom Truck One  vs.  SUNation Energy

Custom Truck One

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Custom Truck One are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Custom Truck is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

SUNation Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days SUNation Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Custom Truck and SUNation Energy

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

The idea behind Custom Truck One and SUNation Energy 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.