Correlation Between Sunrun and Canadian Solar

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

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

Diversification Opportunities for Sunrun and Canadian Solar

-0.41

Correlation Coefficient

Sunrun  Canadian Solar

Very good diversification

The 3 months correlation between Sunrun and Canadian is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sunrun Inc and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar 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 Canadian Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Solar has no effect on the direction of Sunrun i.e., Sunrun and Canadian Solar go up and down completely randomly.

Pair Corralation between Sunrun and Canadian Solar

Considering the 90-day investment horizon Sunrun Inc is expected to generate 1.52 times more return on investment than Canadian Solar. However, Sunrun is 1.52 times more volatile than Canadian Solar. It trades about 0.2 of its potential returns per unit of risk. Canadian Solar is currently generating about 0.08 per unit of risk. If you would invest  818.00  in Sunrun Inc on June 29, 2025 and sell it today you would earn a total of  949.00  from holding Sunrun Inc or generate 116.01% return on investment over 90 days.

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

Sunrun Inc  vs.  Canadian Solar

Sunrun Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunrun Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Sunrun displayed solid returns over the last few months and may actually be approaching a breakup point.

Canadian Solar

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Solar are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward indicators, Canadian Solar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunrun and Canadian Solar

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

The idea behind Sunrun Inc and Canadian Solar 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.