Correlation Between Sunrun and KLA Tencor

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

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

Diversification Opportunities for Sunrun and KLA Tencor

-0.69

Correlation Coefficient

Sunrun  KLA Tencor

Excellent diversification

The 3 months correlation between Sunrun and KLA is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sunrun Inc and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor and Sunrun 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 Sunrun Inc are associated (or correlated) with KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of Sunrun i.e., Sunrun and KLA Tencor go up and down completely randomly.

Pair Corralation between Sunrun and KLA Tencor

Considering the 90-day investment horizon Sunrun Inc is expected to under-perform the KLA Tencor. In addition to that, Sunrun is 2.14 times more volatile than KLA Tencor. It trades about -0.11 of its total potential returns per unit of risk. KLA Tencor is currently generating about 0.11 per unit of volatility. If you would invest  64,557  in KLA Tencor on November 28, 2024 and sell it today you would earn a total of  7,940  from holding KLA Tencor or generate 12.3% return on investment over 90 days.

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

Sunrun Inc  vs.  KLA Tencor

Sunrun Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sunrun Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

KLA Tencor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KLA Tencor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, KLA Tencor exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunrun and KLA Tencor

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

The idea behind Sunrun Inc and KLA Tencor 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.