Correlation Between United Insurance and ORMAT TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both United Insurance and ORMAT TECHNOLOGIES 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 United Insurance and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Insurance Holdings and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on United Insurance and ORMAT TECHNOLOGIES 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 United Insurance with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and ORMAT TECHNOLOGIES.
Diversification Opportunities for United Insurance and ORMAT TECHNOLOGIES
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and ORMAT is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and United Insurance 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 United Insurance Holdings are associated (or correlated) with ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of United Insurance i.e., United Insurance and ORMAT TECHNOLOGIES go up and down completely randomly.
Pair Corralation between United Insurance and ORMAT TECHNOLOGIES
Assuming the 90 days horizon United Insurance Holdings is expected to generate 1.59 times more return on investment than ORMAT TECHNOLOGIES. However, United Insurance is 1.59 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.08 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about -0.35 per unit of risk. If you would invest 1,220 in United Insurance Holdings on September 22, 2024 and sell it today you would earn a total of 50.00 from holding United Insurance Holdings or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Insurance Holdings vs. ORMAT TECHNOLOGIES
Performance |
| Timeline |
| United Insurance Holdings |
| ORMAT TECHNOLOGIES |
United Insurance and ORMAT TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Insurance and ORMAT TECHNOLOGIES
The main advantage of trading using opposite United Insurance and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance position performs unexpectedly, ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES will offset losses from the drop in ORMAT TECHNOLOGIES's long position.| United Insurance vs. Insurance Australia Group | United Insurance vs. Superior Plus Corp | United Insurance vs. SIVERS SEMICONDUCTORS AB | United Insurance vs. CHINA HUARONG ENERHD 50 |
| ORMAT TECHNOLOGIES vs. Chesapeake Utilities | ORMAT TECHNOLOGIES vs. ZURICH INSURANCE GROUP | ORMAT TECHNOLOGIES vs. Zurich Insurance Group | ORMAT TECHNOLOGIES vs. United Insurance Holdings |
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 the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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