Correlation Between Sunrun and Hyliion Holdings

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

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

Diversification Opportunities for Sunrun and Hyliion Holdings

-0.77

Correlation Coefficient

Sunrun  Hyliion Holdings

Pay attention - limited upside

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

Pair Corralation between Sunrun and Hyliion Holdings

Considering the 90-day investment horizon Sunrun Inc is expected to under-perform the Hyliion Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Sunrun Inc is 1.02 times less risky than Hyliion Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The Hyliion Holdings Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  187.00  in Hyliion Holdings Corp on August 30, 2024 and sell it today you would earn a total of  184.00  from holding Hyliion Holdings Corp or generate 98.4% return on investment over 90 days.

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

Sunrun Inc  vs.  Hyliion Holdings Corp

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 inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Hyliion Holdings Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hyliion Holdings Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Hyliion Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunrun and Hyliion Holdings

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

The idea behind Sunrun Inc and Hyliion Holdings Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.