Correlation Between Sunnova Energy and Globalfoundries

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

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

Diversification Opportunities for Sunnova Energy and Globalfoundries

0.7

Correlation Coefficient

Sunnova Energy  Globalfoundries

Poor diversification

The 3 months correlation between Sunnova and Globalfoundries is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sunnova Energy International and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries and Sunnova Energy 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 Sunnova Energy International are associated (or correlated) with Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of Sunnova Energy i.e., Sunnova Energy and Globalfoundries go up and down completely randomly.

Pair Corralation between Sunnova Energy and Globalfoundries

Given the investment horizon of 90 days Sunnova Energy International is expected to under-perform the Globalfoundries. In addition to that, Sunnova Energy is 4.6 times more volatile than Globalfoundries. It trades about -0.22 of its total potential returns per unit of risk. Globalfoundries is currently generating about -0.06 per unit of volatility. If you would invest  4,464  in Globalfoundries on December 24, 2024 and sell it today you would lose (513.00) from holding Globalfoundries or give up 11.49% of portfolio value over 90 days.

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

Sunnova Energy International  vs.  Globalfoundries

Sunnova Energy Inter

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunnova Energy International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Globalfoundries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globalfoundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sunnova Energy and Globalfoundries

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

The idea behind Sunnova Energy International and Globalfoundries 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.