Correlation Between Sunrun and Cirrus Logic

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

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

Diversification Opportunities for Sunrun and Cirrus Logic

0.2

Correlation Coefficient

Sunrun  Cirrus Logic

Modest diversification

The 3 months correlation between Sunrun and Cirrus is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sunrun Inc and Cirrus Logic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirrus Logic and Sunrun 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 Sunrun Inc are associated (or correlated) with Cirrus Logic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirrus Logic has no effect on the direction of Sunrun i.e., Sunrun and Cirrus Logic go up and down completely randomly.

Pair Corralation between Sunrun and Cirrus Logic

Considering the 90-day investment horizon Sunrun Inc is expected to under-perform the Cirrus Logic. In addition to that, Sunrun is 2.38 times more volatile than Cirrus Logic. It trades about -0.05 of its total potential returns per unit of risk. Cirrus Logic is currently generating about 0.15 per unit of volatility. If you would invest  8,998  in Cirrus Logic on February 19, 2024 and sell it today you would earn a total of  2,004  from holding Cirrus Logic or generate 22.27% return on investment over 90 days.

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

Sunrun Inc  vs.  Cirrus Logic

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 June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cirrus Logic

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cirrus Logic are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cirrus Logic unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunrun and Cirrus Logic

The main advantage of trading using opposite Sunrun and Cirrus Logic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunrun position performs unexpectedly, Cirrus Logic 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 Cirrus Logic will offset losses from the drop in Cirrus Logic's long position.

The idea behind Sunrun Inc and Cirrus Logic 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.