Correlation Between ISun and Sunworks

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

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

Diversification Opportunities for ISun and Sunworks

-0.45

Correlation Coefficient

ISun  Sunworks

Very good diversification

The 3 months correlation between ISun and Sunworks is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ISun Inc and Sunworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunworks and ISun 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 ISun Inc are associated (or correlated) with Sunworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunworks has no effect on the direction of ISun i.e., ISun and Sunworks go up and down completely randomly.

Pair Corralation between ISun and Sunworks

If you would invest  162.00  in Sunworks on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Sunworks or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ISun Inc  vs.  Sunworks

ISun Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ISun Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ISun is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Sunworks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunworks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunworks is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ISun and Sunworks

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

The idea behind ISun Inc and Sunworks 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.