Correlation Between Sunnova Energy and SPI Energy

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

Diversification Opportunities for Sunnova Energy and SPI Energy

SunnovaSPIDiversified AwaySunnovaSPIDiversified Away100%
-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sunnova and SPI is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sunnova Energy International and SPI Energy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPI Energy 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 SPI Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPI Energy has no effect on the direction of Sunnova Energy i.e., Sunnova Energy and SPI Energy go up and down completely randomly.

Pair Corralation between Sunnova Energy and SPI Energy

Given the investment horizon of 90 days Sunnova Energy International is expected to under-perform the SPI Energy. But the stock apears to be less risky and, when comparing its historical volatility, Sunnova Energy International is 2.64 times less risky than SPI Energy. The stock trades about -0.11 of its potential returns per unit of risk. The SPI Energy Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  31.00  in SPI Energy Co on November 19, 2024 and sell it today you would lose (16.95) from holding SPI Energy Co or give up 54.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy65.57%
ValuesDaily Returns

Sunnova Energy International  vs.  SPI Energy Co

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -60-40-20020406080
JavaScript chart by amCharts 3.21.15NOVA SPI
       Timeline  
Sunnova Energy Inter 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb22.533.544.555.5
SPI Energy 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days SPI Energy Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, SPI Energy is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Sunnova Energy and SPI Energy Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.74-8.79-5.85-2.9-0.04572.65.348.0810.8213.56 0.0030.0040.0050.0060.007
JavaScript chart by amCharts 3.21.15NOVA SPI
       Returns  

Pair Trading with Sunnova Energy and SPI Energy

The main advantage of trading using opposite Sunnova Energy and SPI Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunnova Energy position performs unexpectedly, SPI 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 SPI Energy will offset losses from the drop in SPI Energy's long position.
The idea behind Sunnova Energy International and SPI Energy Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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