Correlation Between Nextracker and Sunnova Energy

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Can any of the company-specific risk be diversified away by investing in both Nextracker and Sunnova 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 Nextracker and Sunnova Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextracker Class A and Sunnova Energy International, you can compare the effects of market volatilities on Nextracker and Sunnova 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 Nextracker with a short position of Sunnova Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextracker and Sunnova Energy.

Diversification Opportunities for Nextracker and Sunnova Energy

-0.04
  Correlation Coefficient

Good diversification

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

Pair Corralation between Nextracker and Sunnova Energy

Considering the 90-day investment horizon Nextracker Class A is expected to under-perform the Sunnova Energy. But the stock apears to be less risky and, when comparing its historical volatility, Nextracker Class A is 2.21 times less risky than Sunnova Energy. The stock trades about -0.07 of its potential returns per unit of risk. The Sunnova Energy International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  365.00  in Sunnova Energy International on September 17, 2024 and sell it today you would earn a total of  35.00  from holding Sunnova Energy International or generate 9.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Nextracker Class A  vs.  Sunnova Energy International

 Performance 
       Timeline  
Nextracker Class A 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Sunnova Energy Inter 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 and Sunnova Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nextracker and Sunnova Energy

The main advantage of trading using opposite Nextracker and Sunnova Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextracker position performs unexpectedly, Sunnova 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 Sunnova Energy will offset losses from the drop in Sunnova Energy's long position.
The idea behind Nextracker Class A and Sunnova Energy International 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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