Correlation Between Clearway Energy and Ormat Technologies
Can any of the company-specific risk be diversified away by investing in both Clearway Energy 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 Clearway Energy and Ormat Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearway Energy and Ormat Technologies, you can compare the effects of market volatilities on Clearway Energy 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 Clearway Energy with a short position of Ormat Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearway Energy and Ormat Technologies.
Diversification Opportunities for Clearway Energy and Ormat Technologies
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clearway and Ormat is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Clearway Energy and Ormat Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ormat Technologies and Clearway Energy 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 Clearway Energy 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 Clearway Energy i.e., Clearway Energy and Ormat Technologies go up and down completely randomly.
Pair Corralation between Clearway Energy and Ormat Technologies
Assuming the 90 days trading horizon Clearway Energy is expected to generate 1.17 times more return on investment than Ormat Technologies. However, Clearway Energy is 1.17 times more volatile than Ormat Technologies. It trades about -0.01 of its potential returns per unit of risk. Ormat Technologies is currently generating about -0.03 per unit of risk. If you would invest 2,803 in Clearway Energy on October 25, 2024 and sell it today you would lose (416.00) from holding Clearway Energy or give up 14.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearway Energy vs. Ormat Technologies
Performance |
| Timeline |
| Clearway Energy |
| Ormat Technologies |
Clearway Energy and Ormat Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearway Energy and Ormat Technologies
The main advantage of trading using opposite Clearway Energy and Ormat Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearway Energy 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.| Clearway Energy vs. Brookfield Renewable Corp | Clearway Energy vs. Nextera Energy Partners | Clearway Energy vs. Brookfield Renewable Partners | Clearway Energy vs. Clearway Energy Class |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |