Correlation Between Sunrun and Emeren

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

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

Diversification Opportunities for Sunrun and Emeren

0.24

Correlation Coefficient

Sunrun  Emeren

Modest diversification

The 3 months correlation between Sunrun and Emeren is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sunrun Inc and Emeren Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emeren Group 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 Emeren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emeren Group has no effect on the direction of Sunrun i.e., Sunrun and Emeren go up and down completely randomly.

Pair Corralation between Sunrun and Emeren

Considering the 90-day investment horizon Sunrun Inc is expected to under-perform the Emeren. In addition to that, Sunrun is 1.17 times more volatile than Emeren Group. It trades about -0.1 of its total potential returns per unit of risk. Emeren Group is currently generating about 0.03 per unit of volatility. If you would invest  186.00  in Emeren Group on September 3, 2024 and sell it today you would earn a total of  4.00  from holding Emeren Group or generate 2.15% return on investment over 90 days.

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

Sunrun Inc  vs.  Emeren Group

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.

Emeren Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emeren Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Emeren may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sunrun and Emeren

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

The idea behind Sunrun Inc and Emeren Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.