Correlation Between Sunnova Energy and Nextracker

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

Diversification Opportunities for Sunnova Energy and Nextracker

-0.04

Correlation Coefficient

Sunnova Energy  Nextracker

Good diversification

The 3 months correlation between Sunnova and Nextracker is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sunnova Energy International and Nextracker Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextracker Class A 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 Nextracker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextracker Class A has no effect on the direction of Sunnova Energy i.e., Sunnova Energy and Nextracker go up and down completely randomly.

Pair Corralation between Sunnova Energy and Nextracker

Given the investment horizon of 90 days Sunnova Energy International is expected to under-perform the Nextracker. In addition to that, Sunnova Energy is 2.13 times more volatile than Nextracker Class A. It trades about -0.13 of its total potential returns per unit of risk. Nextracker Class A is currently generating about 0.0 per unit of volatility. If you would invest  3,734  in Nextracker Class A on September 17, 2024 and sell it today you would lose (182.50) from holding Nextracker Class A or give up 4.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Sunnova Energy International  vs.  Nextracker Class A

Sunnova Energy Inter

Risk-Adjusted Performance

0 of 100

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nextracker Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextracker Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nextracker is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sunnova Energy and Nextracker

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

The idea behind Sunnova Energy International and Nextracker Class A 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.