Correlation Between Amazon and ORMAT TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and ORMAT TECHNOLOGIES.
Diversification Opportunities for Amazon and ORMAT TECHNOLOGIES
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Amazon and ORMAT is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and ORMAT TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Amazon and ORMAT TECHNOLOGIES
Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.36 times more return on investment than ORMAT TECHNOLOGIES. However, Amazon is 1.36 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.21 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about 0.06 per unit of risk. If you would invest 17,516 in Amazon Inc on August 27, 2024 and sell it today you would earn a total of 1,590 from holding Amazon Inc or generate 9.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. ORMAT TECHNOLOGIES
Performance |
| Timeline |
| Amazon Inc |
| ORMAT TECHNOLOGIES |
Amazon and ORMAT TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and ORMAT TECHNOLOGIES
The main advantage of trading using opposite Amazon and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.| Amazon vs. Big 5 Sporting | Amazon vs. Gold Road Resources | Amazon vs. Fukuyama Transporting Co | Amazon vs. Gaztransport Technigaz SA |
| ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Microsoft |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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