Correlation Between SunHydrogen and Sunrun

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

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

Diversification Opportunities for SunHydrogen and Sunrun

0.63

Correlation Coefficient

SunHydrogen  Sunrun

Poor diversification

The 3 months correlation between SunHydrogen and Sunrun is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SunHydrogen and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc and SunHydrogen 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 SunHydrogen 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 SunHydrogen i.e., SunHydrogen and Sunrun go up and down completely randomly.

Pair Corralation between SunHydrogen and Sunrun

Given the investment horizon of 90 days SunHydrogen is expected to generate 1.24 times more return on investment than Sunrun. However, SunHydrogen is 1.24 times more volatile than Sunrun Inc. It trades about 0.02 of its potential returns per unit of risk. Sunrun Inc is currently generating about -0.1 per unit of risk. If you would invest  2.10  in SunHydrogen on September 2, 2024 and sell it today you would lose (0.10) from holding SunHydrogen or give up 4.76% of portfolio value over 90 days.

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

SunHydrogen  vs.  Sunrun Inc

SunHydrogen

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SunHydrogen are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, SunHydrogen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sunrun Inc

Risk-Adjusted Performance

0 of 100

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

Pair Trading with SunHydrogen and Sunrun

The main advantage of trading using opposite SunHydrogen and Sunrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunHydrogen 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 SunHydrogen 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.