Correlation Between ORMAT TECHNOLOGIES and LIFE SCIREIT
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and LIFE SCIREIT 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 LIFE SCIREIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and LIFE SCIREIT PLC, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and LIFE SCIREIT 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 LIFE SCIREIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and LIFE SCIREIT.
Diversification Opportunities for ORMAT TECHNOLOGIES and LIFE SCIREIT
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ORMAT and LIFE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and LIFE SCIREIT PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE SCIREIT PLC 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 LIFE SCIREIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE SCIREIT PLC has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and LIFE SCIREIT go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and LIFE SCIREIT
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.47 times more return on investment than LIFE SCIREIT. However, ORMAT TECHNOLOGIES is 2.14 times less risky than LIFE SCIREIT. It trades about -0.01 of its potential returns per unit of risk. LIFE SCIREIT PLC is currently generating about -0.03 per unit of risk. If you would invest 8,141 in ORMAT TECHNOLOGIES on September 14, 2024 and sell it today you would lose (879.00) from holding ORMAT TECHNOLOGIES or give up 10.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. LIFE SCIREIT PLC
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| LIFE SCIREIT PLC |
ORMAT TECHNOLOGIES and LIFE SCIREIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and LIFE SCIREIT
The main advantage of trading using opposite ORMAT TECHNOLOGIES and LIFE SCIREIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, LIFE SCIREIT 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 LIFE SCIREIT will offset losses from the drop in LIFE SCIREIT's long position.| ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc |
| LIFE SCIREIT vs. Playtech plc | LIFE SCIREIT vs. Uber Technologies | LIFE SCIREIT vs. ORMAT TECHNOLOGIES | LIFE SCIREIT vs. AAC TECHNOLOGHLDGADR |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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