Correlation Between Sunnova Energy and Shoals Technologies
Can any of the company-specific risk be diversified away by investing in both Sunnova Energy and Shoals Technologies 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 Shoals Technologies 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 Shoals Technologies Group, you can compare the effects of market volatilities on Sunnova Energy and Shoals Technologies 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 Shoals Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunnova Energy and Shoals Technologies.
Diversification Opportunities for Sunnova Energy and Shoals Technologies
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunnova and Shoals is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sunnova Energy International and Shoals Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shoals Technologies 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 Shoals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shoals Technologies has no effect on the direction of Sunnova Energy i.e., Sunnova Energy and Shoals Technologies go up and down completely randomly.
Pair Corralation between Sunnova Energy and Shoals Technologies
Given the investment horizon of 90 days Sunnova Energy International is expected to generate 2.44 times more return on investment than Shoals Technologies. However, Sunnova Energy is 2.44 times more volatile than Shoals Technologies Group. It trades about 0.09 of its potential returns per unit of risk. Shoals Technologies Group is currently generating about -0.01 per unit of risk. If you would invest 535.00 in Sunnova Energy International on August 28, 2024 and sell it today you would lose (1.00) from holding Sunnova Energy International or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunnova Energy International vs. Shoals Technologies Group
Performance |
| Timeline |
| Sunnova Energy Inter |
| Shoals Technologies |
Sunnova Energy and Shoals Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunnova Energy and Shoals Technologies
The main advantage of trading using opposite Sunnova Energy and Shoals Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunnova Energy position performs unexpectedly, Shoals Technologies 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 Shoals Technologies will offset losses from the drop in Shoals Technologies' long position.| Sunnova Energy vs. Enphase Energy | Sunnova Energy vs. First Solar | Sunnova Energy vs. SolarEdge Technologies | 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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