Correlation Between Sunrun and Miller Industries

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

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

Diversification Opportunities for Sunrun and Miller Industries

0.87

Correlation Coefficient

Sunrun  Miller Industries

Very poor diversification

The 3 months correlation between Sunrun and Miller is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sunrun Inc and Miller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Industries 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 Miller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Industries has no effect on the direction of Sunrun i.e., Sunrun and Miller Industries go up and down completely randomly.

Pair Corralation between Sunrun and Miller Industries

Considering the 90-day investment horizon Sunrun Inc is expected to generate 1.81 times more return on investment than Miller Industries. However, Sunrun is 1.81 times more volatile than Miller Industries. It trades about -0.12 of its potential returns per unit of risk. Miller Industries is currently generating about -0.23 per unit of risk. If you would invest  950.00  in Sunrun Inc on December 28, 2024 and sell it today you would lose (329.00) from holding Sunrun Inc or give up 34.63% of portfolio value over 90 days.

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

Sunrun Inc  vs.  Miller Industries

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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Miller Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Miller Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Sunrun and Miller Industries

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

The idea behind Sunrun Inc and Miller Industries 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.