Correlation Between ORMAT TECHNOLOGIES and Digilife Technologies
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and Digilife 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 ORMAT TECHNOLOGIES and Digilife Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and Digilife Technologies Limited, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and Digilife 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 ORMAT TECHNOLOGIES with a short position of Digilife Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and Digilife Technologies.
Diversification Opportunities for ORMAT TECHNOLOGIES and Digilife Technologies
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ORMAT and Digilife is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Digilife Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digilife Technologies 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 Digilife Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digilife Technologies has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Digilife Technologies go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and Digilife Technologies
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.3 times more return on investment than Digilife Technologies. However, ORMAT TECHNOLOGIES is 3.3 times less risky than Digilife Technologies. It trades about 0.16 of its potential returns per unit of risk. Digilife Technologies Limited is currently generating about 0.04 per unit of risk. If you would invest 7,320 in ORMAT TECHNOLOGIES on September 1, 2024 and sell it today you would earn a total of 392.00 from holding ORMAT TECHNOLOGIES or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. Digilife Technologies Limited
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| Digilife Technologies |
ORMAT TECHNOLOGIES and Digilife Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and Digilife Technologies
The main advantage of trading using opposite ORMAT TECHNOLOGIES and Digilife Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, Digilife 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 Digilife Technologies will offset losses from the drop in Digilife Technologies' long position.| ORMAT TECHNOLOGIES vs. SIVERS SEMICONDUCTORS AB | ORMAT TECHNOLOGIES vs. Darden Restaurants | ORMAT TECHNOLOGIES vs. Reliance Steel Aluminum | ORMAT TECHNOLOGIES vs. Q2M Managementberatung AG |
| Digilife Technologies vs. ATT Inc | Digilife Technologies vs. Deutsche Telekom AG | Digilife Technologies vs. Superior Plus Corp | Digilife Technologies vs. NMI Holdings |
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.
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