Correlation Between Gold Bond and Ormat Technologies
Can any of the company-specific risk be diversified away by investing in both Gold Bond 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 Gold Bond and Ormat Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gold Bond and Ormat Technologies, you can compare the effects of market volatilities on Gold Bond 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 Gold Bond with a short position of Ormat Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Bond and Ormat Technologies.
Diversification Opportunities for Gold Bond and Ormat Technologies
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Ormat is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bond and Ormat Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ormat Technologies and Gold Bond 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 The Gold Bond 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 Gold Bond i.e., Gold Bond and Ormat Technologies go up and down completely randomly.
Pair Corralation between Gold Bond and Ormat Technologies
Assuming the 90 days trading horizon Gold Bond is expected to generate 1.55 times less return on investment than Ormat Technologies. In addition to that, Gold Bond is 1.43 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 0.11 per unit of volatility. If you would invest 2,312,811 in Ormat Technologies on August 25, 2024 and sell it today you would earn a total of 637,189 from holding Ormat Technologies or generate 27.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gold Bond vs. Ormat Technologies
Performance |
| Timeline |
| Gold Bond |
| Ormat Technologies |
Gold Bond and Ormat Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Bond and Ormat Technologies
The main advantage of trading using opposite Gold Bond and Ormat Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Bond 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.| Gold Bond vs. Big Shopping Centers | Gold Bond vs. Al Bad Massuot Yitzhak | Gold Bond vs. Harel Insurance Investments | Gold Bond vs. Palram |
| Ormat Technologies vs. Elbit Systems | Ormat Technologies vs. Nice | Ormat Technologies vs. Tower Semiconductor | Ormat Technologies vs. Nova |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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