Correlation Between Snap and Sunrun
Can any of the company-specific risk be diversified away by investing in both Snap 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 Snap and Sunrun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Sunrun Inc, you can compare the effects of market volatilities on Snap 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 Snap with a short position of Sunrun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Sunrun.
Diversification Opportunities for Snap and Sunrun
Excellent diversification
The 3 months correlation between Snap and Sunrun is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc and Snap 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 Snap Inc 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 Snap i.e., Snap and Sunrun go up and down completely randomly.
Pair Corralation between Snap and Sunrun
Given the investment horizon of 90 days Snap Inc is expected to generate 0.75 times more return on investment than Sunrun. However, Snap Inc is 1.33 times less risky than Sunrun. It trades about 0.03 of its potential returns per unit of risk. Sunrun Inc is currently generating about -0.01 per unit of risk. If you would invest 930.00 in Snap Inc on August 28, 2024 and sell it today you would earn a total of 230.00 from holding Snap Inc or generate 24.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Sunrun Inc
Performance |
| Timeline |
| Snap Inc |
| Sunrun Inc |
Snap and Sunrun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Sunrun
The main advantage of trading using opposite Snap and Sunrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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.The idea behind Snap Inc and Sunrun Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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