Correlation Between ORMAT TECHNOLOGIES and United Natural
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and United Natural 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 United Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and United Natural Foods, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and United Natural 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 United Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and United Natural.
Diversification Opportunities for ORMAT TECHNOLOGIES and United Natural
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ORMAT and United is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and United Natural Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Natural Foods 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 United Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Natural Foods has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and United Natural go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and United Natural
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.42 times more return on investment than United Natural. However, ORMAT TECHNOLOGIES is 2.37 times less risky than United Natural. It trades about 0.0 of its potential returns per unit of risk. United Natural Foods is currently generating about -0.01 per unit of risk. If you would invest 8,386 in ORMAT TECHNOLOGIES on September 3, 2024 and sell it today you would lose (656.00) from holding ORMAT TECHNOLOGIES or give up 7.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. United Natural Foods
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| United Natural Foods |
ORMAT TECHNOLOGIES and United Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and United Natural
The main advantage of trading using opposite ORMAT TECHNOLOGIES and United Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, United Natural 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 United Natural will offset losses from the drop in United Natural's long position.| ORMAT TECHNOLOGIES vs. TOTAL GABON | ORMAT TECHNOLOGIES vs. Walgreens Boots Alliance | ORMAT TECHNOLOGIES vs. Peak Resources Limited |
| United Natural vs. Performance Food Group | United Natural vs. Superior Plus Corp | United Natural vs. NMI Holdings | United Natural vs. Origin Agritech |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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