Correlation Between First Solar and Sunrun
Can any of the company-specific risk be diversified away by investing in both First Solar 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 First Solar and Sunrun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and Sunrun Inc, you can compare the effects of market volatilities on First Solar 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 First Solar with a short position of Sunrun. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Sunrun.
Diversification Opportunities for First Solar and Sunrun
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Sunrun is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding First Solar and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc and First Solar 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 First Solar 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 First Solar i.e., First Solar and Sunrun go up and down completely randomly.
Pair Corralation between First Solar and Sunrun
Given the investment horizon of 90 days First Solar is expected to under-perform the Sunrun. But the stock apears to be less risky and, when comparing its historical volatility, First Solar is 1.58 times less risky than Sunrun. The stock trades about -0.08 of its potential returns per unit of risk. The Sunrun Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,350 in Sunrun Inc on August 24, 2024 and sell it today you would lose (328.00) from holding Sunrun Inc or give up 24.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Solar vs. Sunrun Inc
Performance |
| Timeline |
| First Solar |
| Sunrun Inc |
First Solar and Sunrun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and Sunrun
The main advantage of trading using opposite First Solar and Sunrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar 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.| First Solar vs. Small Cap Core | First Solar vs. Freedom Holding Corp | First Solar vs. Gfl Environmental Holdings | First Solar vs. Growth Fund Of |
| Sunrun vs. Maxeon Solar Technologies | Sunrun vs. Canadian Solar | Sunrun vs. First Solar | Sunrun vs. Sunnova Energy International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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