Correlation Between SunPower and ABCO Energy
Can any of the company-specific risk be diversified away by investing in both SunPower and ABCO Energy 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 SunPower and ABCO Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunPower and ABCO Energy, you can compare the effects of market volatilities on SunPower and ABCO Energy 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 SunPower with a short position of ABCO Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunPower and ABCO Energy.
Diversification Opportunities for SunPower and ABCO Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SunPower and ABCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SunPower and ABCO Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABCO Energy and SunPower 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 SunPower are associated (or correlated) with ABCO Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABCO Energy has no effect on the direction of SunPower i.e., SunPower and ABCO Energy go up and down completely randomly.
Pair Corralation between SunPower and ABCO Energy
Given the investment horizon of 90 days SunPower is expected to under-perform the ABCO Energy. But the stock apears to be less risky and, when comparing its historical volatility, SunPower is 1.63 times less risky than ABCO Energy. The stock trades about -0.12 of its potential returns per unit of risk. The ABCO Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 0.10 in ABCO Energy on September 1, 2024 and sell it today you would lose (0.09) from holding ABCO Energy or give up 90.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 81.99% |
| Values | Daily Returns |
SunPower vs. ABCO Energy
Performance |
| Timeline |
| SunPower |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ABCO Energy |
SunPower and ABCO Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunPower and ABCO Energy
The main advantage of trading using opposite SunPower and ABCO Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunPower position performs unexpectedly, ABCO Energy 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 ABCO Energy will offset losses from the drop in ABCO Energy's long position.| SunPower vs. Enphase Energy | SunPower vs. First Solar | SunPower vs. Sunnova Energy International | SunPower vs. SolarEdge Technologies |
| ABCO Energy vs. SinglePoint | ABCO Energy vs. VivoPower International PLC | ABCO Energy vs. SPI Energy Co | ABCO Energy vs. Solar Integrated Roofing |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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