Correlation Between NEW MILLENNIUM and ORMAT TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both NEW MILLENNIUM 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 NEW MILLENNIUM and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEW MILLENNIUM IRON and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on NEW MILLENNIUM 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 NEW MILLENNIUM with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MILLENNIUM and ORMAT TECHNOLOGIES.
Diversification Opportunities for NEW MILLENNIUM and ORMAT TECHNOLOGIES
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NEW and ORMAT is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and NEW MILLENNIUM 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 NEW MILLENNIUM IRON 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 NEW MILLENNIUM i.e., NEW MILLENNIUM and ORMAT TECHNOLOGIES go up and down completely randomly.
Pair Corralation between NEW MILLENNIUM and ORMAT TECHNOLOGIES
Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to generate 5.96 times more return on investment than ORMAT TECHNOLOGIES. However, NEW MILLENNIUM is 5.96 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.05 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about -0.02 per unit of risk. If you would invest 205.00 in NEW MILLENNIUM IRON on October 16, 2024 and sell it today you would earn a total of 590.00 from holding NEW MILLENNIUM IRON or generate 287.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEW MILLENNIUM IRON vs. ORMAT TECHNOLOGIES
Performance |
| Timeline |
| NEW MILLENNIUM IRON |
| ORMAT TECHNOLOGIES |
NEW MILLENNIUM and ORMAT TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEW MILLENNIUM and ORMAT TECHNOLOGIES
The main advantage of trading using opposite NEW MILLENNIUM and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW MILLENNIUM 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.| NEW MILLENNIUM vs. Ebro Foods SA | NEW MILLENNIUM vs. United Natural Foods | NEW MILLENNIUM vs. Sqs Software Quality | NEW MILLENNIUM vs. COFCO Joycome Foods |
| ORMAT TECHNOLOGIES vs. Sch Environnement SA | ORMAT TECHNOLOGIES vs. NEW MILLENNIUM IRON | ORMAT TECHNOLOGIES vs. Infrastrutture Wireless Italiane | ORMAT TECHNOLOGIES vs. Warner Music Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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