Correlation Between Algonquin Power and Ormat Technologies
Can any of the company-specific risk be diversified away by investing in both Algonquin Power 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 Algonquin Power and Ormat Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algonquin Power Utilities and Ormat Technologies, you can compare the effects of market volatilities on Algonquin Power 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 Algonquin Power with a short position of Ormat Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Ormat Technologies.
Diversification Opportunities for Algonquin Power and Ormat Technologies
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Algonquin and Ormat is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities and Ormat Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ormat Technologies and Algonquin Power 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 Algonquin Power Utilities 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 Algonquin Power i.e., Algonquin Power and Ormat Technologies go up and down completely randomly.
Pair Corralation between Algonquin Power and Ormat Technologies
Given the investment horizon of 90 days Algonquin Power Utilities is expected to under-perform the Ormat Technologies. In addition to that, Algonquin Power is 1.09 times more volatile than Ormat Technologies. It trades about -0.05 of its total potential returns per unit of risk. Ormat Technologies is currently generating about 0.0 per unit of volatility. If you would invest 8,683 in Ormat Technologies on August 31, 2024 and sell it today you would lose (521.00) from holding Ormat Technologies or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 68.98% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Ormat Technologies
Performance |
| Timeline |
| Algonquin Power Utilities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ormat Technologies |
Algonquin Power and Ormat Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Ormat Technologies
The main advantage of trading using opposite Algonquin Power and Ormat Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power 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' long position.| Algonquin Power vs. SiriusPoint | Algonquin Power vs. Brightspire Capital | Algonquin Power vs. RLJ Lodging Trust | Algonquin Power vs. Harrow Health 8625 |
| Ormat Technologies vs. Altus Power | Ormat Technologies vs. Enlight Renewable Energy | Ormat Technologies vs. Fluence Energy | Ormat Technologies vs. Atlantica Sustainable Infrastructure |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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