Correlation Between SMA Solar and Sunrun
Can any of the company-specific risk be diversified away by investing in both SMA 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 SMA Solar and Sunrun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Sunrun Inc, you can compare the effects of market volatilities on SMA 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 SMA Solar with a short position of Sunrun. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Sunrun.
Diversification Opportunities for SMA Solar and Sunrun
Almost no diversification
The 3 months correlation between SMA and Sunrun is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc and SMA 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and Sunrun go up and down completely randomly.
Pair Corralation between SMA Solar and Sunrun
Assuming the 90 days horizon SMA Solar Technology is expected to generate 0.59 times more return on investment than Sunrun. However, SMA Solar Technology is 1.68 times less risky than Sunrun. It trades about -0.2 of its potential returns per unit of risk. Sunrun Inc is currently generating about -0.12 per unit of risk. If you would invest 164.00 in SMA Solar Technology on August 24, 2024 and sell it today you would lose (33.00) from holding SMA Solar Technology or give up 20.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
SMA Solar Technology vs. Sunrun Inc
Performance |
| Timeline |
| SMA Solar Technology |
| Sunrun Inc |
SMA Solar and Sunrun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Sunrun
The main advantage of trading using opposite SMA Solar and Sunrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA 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.| SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. Xinyi Solar Holdings | SMA Solar vs. SolarEdge Technologies | SMA Solar vs. Sunrun Inc |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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