Correlation Between Smart Powerr and Ormat Technologies
Can any of the company-specific risk be diversified away by investing in both Smart Powerr 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 Smart Powerr and Ormat Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Powerr Corp and Ormat Technologies, you can compare the effects of market volatilities on Smart Powerr 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 Smart Powerr with a short position of Ormat Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Powerr and Ormat Technologies.
Diversification Opportunities for Smart Powerr and Ormat Technologies
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smart and Ormat is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Smart Powerr Corp and Ormat Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ormat Technologies and Smart Powerr 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 Smart Powerr Corp 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 Smart Powerr i.e., Smart Powerr and Ormat Technologies go up and down completely randomly.
Pair Corralation between Smart Powerr and Ormat Technologies
Given the investment horizon of 90 days Smart Powerr Corp is expected to generate 1.92 times more return on investment than Ormat Technologies. However, Smart Powerr is 1.92 times more volatile than Ormat Technologies. It trades about -0.1 of its potential returns per unit of risk. Ormat Technologies is currently generating about -0.2 per unit of risk. If you would invest 72.00 in Smart Powerr Corp on November 5, 2024 and sell it today you would lose (5.00) from holding Smart Powerr Corp or give up 6.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smart Powerr Corp vs. Ormat Technologies
Performance |
| Timeline |
| Smart Powerr Corp |
| Ormat Technologies |
Smart Powerr and Ormat Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart Powerr and Ormat Technologies
The main advantage of trading using opposite Smart Powerr and Ormat Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Powerr 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.| Smart Powerr vs. Verde Clean Fuels | Smart Powerr vs. Ormat Technologies | Smart Powerr vs. Tokyo Electric Power | Smart Powerr vs. Verde Clean Fuels |
| Ormat Technologies vs. Altus Power | Ormat Technologies vs. Enlight Renewable Energy | Ormat Technologies vs. Fluence Energy | Ormat Technologies vs. Clearway Energy |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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