Correlation Between Intel and Sunrun

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

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

Diversification Opportunities for Intel and Sunrun

0.52

Correlation Coefficient

Intel  Sunrun

Very weak diversification

The 3 months correlation between Intel and Sunrun is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc and Intel 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 Intel 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 Intel i.e., Intel and Sunrun go up and down completely randomly.

Pair Corralation between Intel and Sunrun

Given the investment horizon of 90 days Intel is expected to under-perform the Sunrun. But the stock apears to be less risky and, when comparing its historical volatility, Intel is 1.68 times less risky than Sunrun. The stock trades about -0.51 of its potential returns per unit of risk. The Sunrun Inc is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,274  in Sunrun Inc on January 30, 2024 and sell it today you would lose (178.00) from holding Sunrun Inc or give up 13.97% of portfolio value over 90 days.

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

Intel  vs.  Sunrun Inc

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel 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 rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sunrun Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Intel and Sunrun

The main advantage of trading using opposite Intel and Sunrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.