Correlation Between GFL ENVIRONM and ORMAT TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM 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 GFL ENVIRONM and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on GFL ENVIRONM 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 GFL ENVIRONM with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and ORMAT TECHNOLOGIES.
Diversification Opportunities for GFL ENVIRONM and ORMAT TECHNOLOGIES
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GFL and ORMAT is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and GFL ENVIRONM 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 GFL ENVIRONM 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 GFL ENVIRONM i.e., GFL ENVIRONM and ORMAT TECHNOLOGIES go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and ORMAT TECHNOLOGIES
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 1.18 times more return on investment than ORMAT TECHNOLOGIES. However, GFL ENVIRONM is 1.18 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.06 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about 0.0 per unit of risk. If you would invest 2,631 in GFL ENVIRONM on September 12, 2024 and sell it today you would earn a total of 1,709 from holding GFL ENVIRONM or generate 64.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. ORMAT TECHNOLOGIES
Performance |
| Timeline |
| GFL ENVIRONM |
| ORMAT TECHNOLOGIES |
GFL ENVIRONM and ORMAT TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and ORMAT TECHNOLOGIES
The main advantage of trading using opposite GFL ENVIRONM and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM 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.| GFL ENVIRONM vs. Veolia Environnement SA | GFL ENVIRONM vs. Superior Plus Corp | GFL ENVIRONM vs. SIVERS SEMICONDUCTORS AB | GFL ENVIRONM vs. NorAm Drilling AS |
| ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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