Correlation Between Sunnova Energy and Daqo New
Can any of the company-specific risk be diversified away by investing in both Sunnova Energy and Daqo New 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 Daqo New 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 Daqo New Energy, you can compare the effects of market volatilities on Sunnova Energy and Daqo New 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 Daqo New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunnova Energy and Daqo New.
Diversification Opportunities for Sunnova Energy and Daqo New
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sunnova and Daqo is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sunnova Energy International and Daqo New Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daqo New Energy 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 Daqo New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daqo New Energy has no effect on the direction of Sunnova Energy i.e., Sunnova Energy and Daqo New go up and down completely randomly.
Pair Corralation between Sunnova Energy and Daqo New
Given the investment horizon of 90 days Sunnova Energy International is expected to generate 3.62 times more return on investment than Daqo New. However, Sunnova Energy is 3.62 times more volatile than Daqo New Energy. It trades about 0.09 of its potential returns per unit of risk. Daqo New Energy is currently generating about -0.09 per unit of risk. If you would invest 538.00 in Sunnova Energy International on August 31, 2024 and sell it today you would earn a total of 3.00 from holding Sunnova Energy International or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunnova Energy International vs. Daqo New Energy
Performance |
| Timeline |
| Sunnova Energy Inter |
| Daqo New Energy |
Sunnova Energy and Daqo New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunnova Energy and Daqo New
The main advantage of trading using opposite Sunnova Energy and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunnova Energy position performs unexpectedly, Daqo New 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 Daqo New will offset losses from the drop in Daqo New's long position.| Sunnova Energy vs. Emeren Group | Sunnova Energy vs. Tigo Energy | Sunnova Energy vs. Sunrun Inc | Sunnova Energy vs. JinkoSolar Holding |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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