Correlation Between Sunrun and Hawaiian Holdings

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Can any of the company-specific risk be diversified away by investing in both Sunrun and Hawaiian Holdings 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 Hawaiian Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunrun Inc and Hawaiian Holdings, you can compare the effects of market volatilities on Sunrun and Hawaiian Holdings 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 Hawaiian Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunrun and Hawaiian Holdings.

Diversification Opportunities for Sunrun and Hawaiian Holdings

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Sunrun and Hawaiian is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sunrun Inc and Hawaiian Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Holdings 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 Hawaiian Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaiian Holdings has no effect on the direction of Sunrun i.e., Sunrun and Hawaiian Holdings go up and down completely randomly.

Pair Corralation between Sunrun and Hawaiian Holdings

Considering the 90-day investment horizon Sunrun Inc is expected to generate 1.7 times more return on investment than Hawaiian Holdings. However, Sunrun is 1.7 times more volatile than Hawaiian Holdings. It trades about 0.01 of its potential returns per unit of risk. Hawaiian Holdings is currently generating about -0.02 per unit of risk. If you would invest  4,211  in Sunrun Inc on September 7, 2022 and sell it today you would lose (1,104)  from holding Sunrun Inc or give up 26.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Sunrun Inc  vs.  Hawaiian Holdings

 Performance (%) 
       Timeline  
Sunrun Inc 
Sunrun Performance
0 of 100
Over the last 90 days Sunrun Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Sunrun Price Channel

Hawaiian Holdings 
Hawaiian Performance
0 of 100
Over the last 90 days Hawaiian Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Hawaiian Price Channel

Sunrun and Hawaiian Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sunrun and Hawaiian Holdings

The main advantage of trading using opposite Sunrun and Hawaiian Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunrun position performs unexpectedly, Hawaiian Holdings 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 Hawaiian Holdings will offset losses from the drop in Hawaiian Holdings' long position.
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The idea behind Sunrun Inc and Hawaiian Holdings 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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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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