Correlation Between FormFactor and Sunrun

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

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

Diversification Opportunities for FormFactor and Sunrun

-0.29

Correlation Coefficient

FormFactor  Sunrun

Very good diversification

The 3 months correlation between FormFactor and Sunrun is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding FormFactor and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc and FormFactor 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 FormFactor 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 FormFactor i.e., FormFactor and Sunrun go up and down completely randomly.

Pair Corralation between FormFactor and Sunrun

Given the investment horizon of 90 days FormFactor is expected to generate 0.9 times more return on investment than Sunrun. However, FormFactor is 1.11 times less risky than Sunrun. It trades about 0.18 of its potential returns per unit of risk. Sunrun Inc is currently generating about 0.03 per unit of risk. If you would invest  4,698  in FormFactor on February 7, 2024 and sell it today you would earn a total of  829.00  from holding FormFactor or generate 17.65% return on investment over 90 days.

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

FormFactor  vs.  Sunrun Inc

FormFactor

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FormFactor are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FormFactor displayed solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady 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.

Pair Trading with FormFactor and Sunrun

The main advantage of trading using opposite FormFactor and Sunrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FormFactor 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 FormFactor 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.