Correlation Between Hannon Armstrong and Ameresco

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

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

Diversification Opportunities for Hannon Armstrong and Ameresco

0.75

Correlation Coefficient

Hannon Armstrong  Ameresco

Poor diversification

The 3 months correlation between Hannon and Ameresco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hannon Armstrong Sustainable and Ameresco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameresco and Hannon Armstrong 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 Hannon Armstrong Sustainable are associated (or correlated) with Ameresco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameresco has no effect on the direction of Hannon Armstrong i.e., Hannon Armstrong and Ameresco go up and down completely randomly.

Pair Corralation between Hannon Armstrong and Ameresco

Given the investment horizon of 90 days Hannon Armstrong Sustainable is expected to generate 0.59 times more return on investment than Ameresco. However, Hannon Armstrong Sustainable is 1.7 times less risky than Ameresco. It trades about -0.06 of its potential returns per unit of risk. Ameresco is currently generating about -0.09 per unit of risk. If you would invest  3,435  in Hannon Armstrong Sustainable on September 14, 2024 and sell it today you would lose (391.00) from holding Hannon Armstrong Sustainable or give up 11.38% of portfolio value over 90 days.

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

Hannon Armstrong Sustainable  vs.  Ameresco

Hannon Armstrong Sus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hannon Armstrong Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Ameresco

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Hannon Armstrong and Ameresco

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

The idea behind Hannon Armstrong Sustainable and Ameresco 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.