Correlation Between Sunrun and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Sunrun and SMA Solar 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 SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunrun Inc and SMA Solar Technology, you can compare the effects of market volatilities on Sunrun and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunrun and SMA Solar.
Diversification Opportunities for Sunrun and SMA Solar
Almost no diversification
The 3 months correlation between Sunrun and SMA is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sunrun Inc and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Sunrun i.e., Sunrun and SMA Solar go up and down completely randomly.
Pair Corralation between Sunrun and SMA Solar
Considering the 90-day investment horizon Sunrun Inc is expected to under-perform the SMA Solar. But the stock apears to be less risky and, when comparing its historical volatility, Sunrun Inc is 1.1 times less risky than SMA Solar. The stock trades about -0.06 of its potential returns per unit of risk. The SMA Solar Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,505 in SMA Solar Technology on September 15, 2024 and sell it today you would lose (55.00) from holding SMA Solar Technology or give up 3.65% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Sunrun Inc vs. SMA Solar Technology
Performance |
Timeline |
Sunrun Inc |
SMA Solar Technology |
Sunrun and SMA Solar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sunrun and SMA Solar
The main advantage of trading using opposite Sunrun and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunrun position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.Sunrun vs. Maxeon Solar Technologies | Sunrun vs. Canadian Solar | Sunrun vs. First Solar | Sunrun vs. Sunnova Energy International |
SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. Sunrun Inc | SMA Solar vs. SMA Solar Technology |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
CEOs Directory Screen CEOs from public companies around the world | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |