Correlation Between Global Net and SUNation Energy

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

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

Diversification Opportunities for Global Net and SUNation Energy

0.35

Correlation Coefficient

Global Net  SUNation Energy

Weak diversification

The 3 months correlation between Global and SUNation is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and SUNation Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNation Energy and Global Net 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 Global Net Lease 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 Global Net i.e., Global Net and SUNation Energy go up and down completely randomly.

Pair Corralation between Global Net and SUNation Energy

Assuming the 90 days trading horizon Global Net Lease is expected to generate 0.12 times more return on investment than SUNation Energy. However, Global Net Lease is 8.12 times less risky than SUNation Energy. It trades about 0.06 of its potential returns per unit of risk. SUNation Energy is currently generating about -0.06 per unit of risk. If you would invest  1,751  in Global Net Lease on October 11, 2024 and sell it today you would earn a total of  526.00  from holding Global Net Lease or generate 30.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	67.34%
Values	Daily Returns

Global Net Lease  vs.  SUNation Energy

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Global Net is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SUNation Energy

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Global Net and SUNation Energy

The main advantage of trading using opposite Global Net and SUNation Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net 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 Global Net Lease 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.