Correlation Between Evergreen Corp and SunPower

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

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

Diversification Opportunities for Evergreen Corp and SunPower

-0.79

Correlation Coefficient

Evergreen Corp  SunPower

Pay attention - limited upside

The 3 months correlation between Evergreen and SunPower is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Corp and SunPower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunPower and Evergreen Corp 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 Evergreen Corp are associated (or correlated) with SunPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunPower has no effect on the direction of Evergreen Corp i.e., Evergreen Corp and SunPower go up and down completely randomly.

Pair Corralation between Evergreen Corp and SunPower

Given the investment horizon of 90 days Evergreen Corp is expected to generate 0.01 times more return on investment than SunPower. However, Evergreen Corp is 100.61 times less risky than SunPower. It trades about 0.15 of its potential returns per unit of risk. SunPower is currently generating about -0.31 per unit of risk. If you would invest  1,143  in Evergreen Corp on September 28, 2024 and sell it today you would earn a total of  46.00  from holding Evergreen Corp or generate 4.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	41.1%
Values	Daily Returns

Evergreen Corp  vs.  SunPower

Evergreen Corp

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Corp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Evergreen Corp is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

SunPower

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SunPower has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SunPower is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Evergreen Corp and SunPower

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

The idea behind Evergreen Corp and SunPower 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.