Correlation Between ORMAT TECHNOLOGIES and GFL ENVIRONM
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and GFL ENVIRONM 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 GFL ENVIRONM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and GFL ENVIRONM, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and GFL ENVIRONM 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 GFL ENVIRONM. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and GFL ENVIRONM.
Diversification Opportunities for ORMAT TECHNOLOGIES and GFL ENVIRONM
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ORMAT and GFL is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and GFL ENVIRONM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFL ENVIRONM 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 GFL ENVIRONM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFL ENVIRONM has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and GFL ENVIRONM go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and GFL ENVIRONM
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to under-perform the GFL ENVIRONM. But the stock apears to be less risky and, when comparing its historical volatility, ORMAT TECHNOLOGIES is 1.18 times less risky than GFL ENVIRONM. The stock trades about 0.0 of its potential returns per unit of risk. The GFL ENVIRONM is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,631 in GFL ENVIRONM on September 12, 2024 and sell it today you would earn a total of 1,709 from holding GFL ENVIRONM or generate 64.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. GFL ENVIRONM
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| GFL ENVIRONM |
ORMAT TECHNOLOGIES and GFL ENVIRONM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and GFL ENVIRONM
The main advantage of trading using opposite ORMAT TECHNOLOGIES and GFL ENVIRONM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, GFL ENVIRONM 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 GFL ENVIRONM will offset losses from the drop in GFL ENVIRONM's long position.| ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc |
| GFL ENVIRONM vs. Veolia Environnement SA | GFL ENVIRONM vs. Superior Plus Corp | GFL ENVIRONM vs. SIVERS SEMICONDUCTORS AB | GFL ENVIRONM vs. NorAm Drilling AS |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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