Correlation Between SUNation Energy and Entravision Communications

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

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

Diversification Opportunities for SUNation Energy and Entravision Communications

-0.47

Correlation Coefficient

SUNation Energy  Entravision Communications

Very good diversification

The 3 months correlation between SUNation and Entravision is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SUNation Energy and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications and SUNation 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 SUNation Energy are associated (or correlated) with Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of SUNation Energy i.e., SUNation Energy and Entravision Communications go up and down completely randomly.

Pair Corralation between SUNation Energy and Entravision Communications

Given the investment horizon of 90 days SUNation Energy is expected to under-perform the Entravision Communications. In addition to that, SUNation Energy is 2.88 times more volatile than Entravision Communications. It trades about -0.06 of its total potential returns per unit of risk. Entravision Communications is currently generating about -0.03 per unit of volatility. If you would invest  602.00  in Entravision Communications on October 26, 2024 and sell it today you would lose (373.00) from holding Entravision Communications or give up 61.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

SUNation Energy  vs.  Entravision Communications

SUNation Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SUNation Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Entravision Communications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Entravision Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SUNation Energy and Entravision Communications

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

The idea behind SUNation Energy and Entravision Communications 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.