Correlation Between Cirrus Logic and Sunrun

Can any of the company-specific risk be diversified away by investing in both Cirrus Logic 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 Cirrus Logic and Sunrun into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cirrus Logic and Sunrun Inc, you can compare the effects of market volatilities on Cirrus Logic 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 Cirrus Logic with a short position of Sunrun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cirrus Logic and Sunrun.

Diversification Opportunities for Cirrus Logic and Sunrun

0.7

Correlation Coefficient

Cirrus Logic  Sunrun

Poor diversification

The 3 months correlation between Cirrus and Sunrun is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cirrus Logic and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc and Cirrus Logic 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 Cirrus Logic 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 Cirrus Logic i.e., Cirrus Logic and Sunrun go up and down completely randomly.

Pair Corralation between Cirrus Logic and Sunrun

Given the investment horizon of 90 days Cirrus Logic is expected to generate 0.43 times more return on investment than Sunrun. However, Cirrus Logic is 2.33 times less risky than Sunrun. It trades about 0.24 of its potential returns per unit of risk. Sunrun Inc is currently generating about 0.08 per unit of risk. If you would invest  9,052  in Cirrus Logic on March 20, 2024 and sell it today you would earn a total of  3,204  from holding Cirrus Logic or generate 35.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cirrus Logic  vs.  Sunrun Inc

Cirrus Logic

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cirrus Logic are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Cirrus Logic unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sunrun Inc

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunrun Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Sunrun displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cirrus Logic and Sunrun

The main advantage of trading using opposite Cirrus Logic and Sunrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cirrus Logic 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 Cirrus Logic 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.