Correlation Between Sunrun and McKesson

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

Diversification Opportunities for Sunrun and McKesson

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sunrun and McKesson is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sunrun Inc and McKesson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McKesson 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 McKesson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McKesson has no effect on the direction of Sunrun i.e., Sunrun and McKesson go up and down completely randomly.

Pair Corralation between Sunrun and McKesson

Considering the 90-day investment horizon Sunrun Inc is expected to generate 3.76 times more return on investment than McKesson. However, Sunrun is 3.76 times more volatile than McKesson. It trades about 0.24 of its potential returns per unit of risk. McKesson is currently generating about -0.08 per unit of risk. If you would invest  2,314  in Sunrun Inc on September 6, 2022 and sell it today you would earn a total of  793.00  from holding Sunrun Inc or generate 34.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sunrun Inc  vs.  McKesson

 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 quite persistent basic indicators, Sunrun is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sunrun Price Channel

McKesson 
McKesson Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in McKesson are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental indicators, McKesson may actually be approaching a critical reversion point that can send shares even higher in January 2023.

McKesson Price Channel

Sunrun and McKesson Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sunrun and McKesson

The main advantage of trading using opposite Sunrun and McKesson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunrun position performs unexpectedly, McKesson 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 McKesson will offset losses from the drop in McKesson's long position.
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The idea behind Sunrun Inc and McKesson 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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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