Correlation Between SunPower and SolarEdge Technologies
Can any of the company-specific risk be diversified away by investing in both SunPower and SolarEdge 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 SunPower and SolarEdge Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunPower and SolarEdge Technologies, you can compare the effects of market volatilities on SunPower and SolarEdge 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 SunPower with a short position of SolarEdge Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunPower and SolarEdge Technologies.
Diversification Opportunities for SunPower and SolarEdge Technologies
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SunPower and SolarEdge is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SunPower and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies 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 SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of SunPower i.e., SunPower and SolarEdge Technologies go up and down completely randomly.
Pair Corralation between SunPower and SolarEdge Technologies
Given the investment horizon of 90 days SunPower is expected to under-perform the SolarEdge Technologies. In addition to that, SunPower is 1.99 times more volatile than SolarEdge Technologies. It trades about -0.11 of its total potential returns per unit of risk. SolarEdge Technologies is currently generating about -0.1 per unit of volatility. If you would invest 31,480 in SolarEdge Technologies on August 30, 2024 and sell it today you would lose (29,994) from holding SolarEdge Technologies or give up 95.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 86.49% |
| Values | Daily Returns |
SunPower vs. SolarEdge Technologies
Performance |
| Timeline |
| SunPower |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SolarEdge Technologies |
SunPower and SolarEdge Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunPower and SolarEdge Technologies
The main advantage of trading using opposite SunPower and SolarEdge Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunPower position performs unexpectedly, SolarEdge 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 SolarEdge Technologies will offset losses from the drop in SolarEdge Technologies' long position.| SunPower vs. Enphase Energy | SunPower vs. First Solar | SunPower vs. Sunnova Energy International | SunPower vs. SolarEdge Technologies |
| SolarEdge Technologies vs. First Solar | SolarEdge Technologies vs. Sunrun Inc | SolarEdge Technologies vs. Canadian Solar | SolarEdge Technologies vs. Enphase Energy |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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