Correlation Between ISun and Sunrun

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

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

Diversification Opportunities for ISun and Sunrun

0.26

Correlation Coefficient

ISun  Sunrun

Modest diversification

The 3 months correlation between ISun and Sunrun is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding iSun Inc and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc and ISun 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 iSun 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 ISun i.e., ISun and Sunrun go up and down completely randomly.

Pair Corralation between ISun and Sunrun

Given the investment horizon of 90 days iSun Inc is expected to under-perform the Sunrun. In addition to that, ISun is 2.89 times more volatile than Sunrun Inc. It trades about -0.01 of its total potential returns per unit of risk. Sunrun Inc is currently generating about 0.07 per unit of volatility. If you would invest  1,180  in Sunrun Inc on February 28, 2024 and sell it today you would earn a total of  170.00  from holding Sunrun Inc or generate 14.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

iSun Inc  vs.  Sunrun Inc

iSun Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iSun Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sunrun Inc

Risk-Adjusted Performance

5 of 100

Insignificant

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 ISun and Sunrun

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

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.