Correlation Between Trinity Industries and Sunrun

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

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

Diversification Opportunities for Trinity Industries and Sunrun

0.77

Correlation Coefficient

Trinity Industries  Sunrun

Poor diversification

The 3 months correlation between Trinity and Sunrun is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Trinity Industries and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc and Trinity Industries 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 Trinity Industries are associated (or correlated) with Sunrun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunrun Inc has no effect on the direction of Trinity Industries i.e., Trinity Industries and Sunrun go up and down completely randomly.

Pair Corralation between Trinity Industries and Sunrun

Considering the 90-day investment horizon Trinity Industries is expected to generate 0.41 times more return on investment than Sunrun. However, Trinity Industries is 2.45 times less risky than Sunrun. It trades about -0.16 of its potential returns per unit of risk. Sunrun Inc is currently generating about -0.14 per unit of risk. If you would invest  3,499  in Trinity Industries on December 28, 2024 and sell it today you would lose (654.00) from holding Trinity Industries or give up 18.69% of portfolio value over 90 days.

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

Trinity Industries  vs.  Sunrun Inc

Trinity Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trinity Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

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.

Pair Trading with Trinity Industries and Sunrun

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

The idea behind Trinity Industries and Sunrun Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.