Correlation Between ORMAT TECHNOLOGIES and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and Hercules Capital 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 ORMAT TECHNOLOGIES and Hercules Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and Hercules Capital, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and Hercules Capital 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 ORMAT TECHNOLOGIES with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and Hercules Capital.
Diversification Opportunities for ORMAT TECHNOLOGIES and Hercules Capital
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ORMAT and Hercules is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES are associated (or correlated) with Hercules Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Capital has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Hercules Capital go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and Hercules Capital
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to under-perform the Hercules Capital. But the stock apears to be less risky and, when comparing its historical volatility, ORMAT TECHNOLOGIES is 1.06 times less risky than Hercules Capital. The stock trades about -0.24 of its potential returns per unit of risk. The Hercules Capital is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,848 in Hercules Capital on October 15, 2024 and sell it today you would earn a total of 72.00 from holding Hercules Capital or generate 3.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. Hercules Capital
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| Hercules Capital |
ORMAT TECHNOLOGIES and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and Hercules Capital
The main advantage of trading using opposite ORMAT TECHNOLOGIES and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, Hercules Capital 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 Hercules Capital will offset losses from the drop in Hercules Capital's long position.| ORMAT TECHNOLOGIES vs. SALESFORCE INC CDR | ORMAT TECHNOLOGIES vs. Delta Air Lines | ORMAT TECHNOLOGIES vs. Pentair plc | ORMAT TECHNOLOGIES vs. Wizz Air Holdings |
| Hercules Capital vs. Tokyu Construction Co | Hercules Capital vs. MidCap Financial Investment | Hercules Capital vs. FARM 51 GROUP | Hercules Capital vs. TITAN MACHINERY |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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