Correlation Between ORMAT TECHNOLOGIES and Casella Waste
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and Casella Waste 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 Casella Waste into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and Casella Waste Systems, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and Casella Waste 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 Casella Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and Casella Waste.
Diversification Opportunities for ORMAT TECHNOLOGIES and Casella Waste
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ORMAT and Casella is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Casella Waste Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casella Waste Systems 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 Casella Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casella Waste Systems has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Casella Waste go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and Casella Waste
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 5.88 times less return on investment than Casella Waste. In addition to that, ORMAT TECHNOLOGIES is 1.06 times more volatile than Casella Waste Systems. It trades about 0.01 of its total potential returns per unit of risk. Casella Waste Systems is currently generating about 0.06 per unit of volatility. If you would invest 7,888 in Casella Waste Systems on September 12, 2024 and sell it today you would earn a total of 2,942 from holding Casella Waste Systems or generate 37.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. Casella Waste Systems
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| Casella Waste Systems |
ORMAT TECHNOLOGIES and Casella Waste Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and Casella Waste
The main advantage of trading using opposite ORMAT TECHNOLOGIES and Casella Waste positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, Casella Waste 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 Casella Waste will offset losses from the drop in Casella Waste's long position.| ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc | ORMAT TECHNOLOGIES vs. Apple Inc |
| Casella Waste vs. Q2M Managementberatung AG | Casella Waste vs. Uber Technologies | Casella Waste vs. CEOTRONICS | Casella Waste vs. ORMAT TECHNOLOGIES |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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