Correlation Between Sunnova Energy and Canadian Solar
Can any of the company-specific risk be diversified away by investing in both Sunnova Energy and Canadian Solar 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 Sunnova Energy and Canadian Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunnova Energy International and Canadian Solar, you can compare the effects of market volatilities on Sunnova Energy and Canadian Solar 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 Sunnova Energy with a short position of Canadian Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunnova Energy and Canadian Solar.
Diversification Opportunities for Sunnova Energy and Canadian Solar
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sunnova and Canadian is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sunnova Energy International and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar and Sunnova Energy 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 Sunnova Energy International are associated (or correlated) with Canadian Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Solar has no effect on the direction of Sunnova Energy i.e., Sunnova Energy and Canadian Solar go up and down completely randomly.
Pair Corralation between Sunnova Energy and Canadian Solar
Given the investment horizon of 90 days Sunnova Energy International is expected to generate 1.78 times more return on investment than Canadian Solar. However, Sunnova Energy is 1.78 times more volatile than Canadian Solar. It trades about 0.01 of its potential returns per unit of risk. Canadian Solar is currently generating about -0.03 per unit of risk. If you would invest 1,052 in Sunnova Energy International on August 28, 2024 and sell it today you would lose (518.00) from holding Sunnova Energy International or give up 49.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunnova Energy International vs. Canadian Solar
Performance |
| Timeline |
| Sunnova Energy Inter |
| Canadian Solar |
Sunnova Energy and Canadian Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunnova Energy and Canadian Solar
The main advantage of trading using opposite Sunnova Energy and Canadian Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunnova Energy position performs unexpectedly, Canadian Solar 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 Canadian Solar will offset losses from the drop in Canadian Solar's long position.| Sunnova Energy vs. Enphase Energy | Sunnova Energy vs. First Solar | Sunnova Energy vs. SolarEdge Technologies | Sunnova Energy vs. JinkoSolar Holding |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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