Correlation Between ORMAT TECHNOLOGIES and NEWELL RUBBERMAID
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and NEWELL RUBBERMAID 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 NEWELL RUBBERMAID into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and NEWELL RUBBERMAID , you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and NEWELL RUBBERMAID 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 NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and NEWELL RUBBERMAID.
Diversification Opportunities for ORMAT TECHNOLOGIES and NEWELL RUBBERMAID
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ORMAT and NEWELL is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID 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 NEWELL RUBBERMAID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWELL RUBBERMAID has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and NEWELL RUBBERMAID go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and NEWELL RUBBERMAID
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to under-perform the NEWELL RUBBERMAID. But the stock apears to be less risky and, when comparing its historical volatility, ORMAT TECHNOLOGIES is 2.2 times less risky than NEWELL RUBBERMAID. The stock trades about -0.01 of its potential returns per unit of risk. The NEWELL RUBBERMAID is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,121 in NEWELL RUBBERMAID on September 14, 2024 and sell it today you would lose (45.00) from holding NEWELL RUBBERMAID or give up 4.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. NEWELL RUBBERMAID
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| NEWELL RUBBERMAID |
ORMAT TECHNOLOGIES and NEWELL RUBBERMAID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and NEWELL RUBBERMAID
The main advantage of trading using opposite ORMAT TECHNOLOGIES and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, NEWELL RUBBERMAID 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 NEWELL RUBBERMAID will offset losses from the drop in NEWELL RUBBERMAID's long position.| ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc |
| NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc | NEWELL RUBBERMAID vs. Apple Inc |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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