Correlation Between ORMAT TECHNOLOGIES and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and BJs Restaurants 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 BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and BJs Restaurants, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and BJs Restaurants.
Diversification Opportunities for ORMAT TECHNOLOGIES and BJs Restaurants
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ORMAT and BJs is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and BJs Restaurants go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and BJs Restaurants
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to under-perform the BJs Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, ORMAT TECHNOLOGIES is 1.3 times less risky than BJs Restaurants. The stock trades about -0.17 of its potential returns per unit of risk. The BJs Restaurants is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 3,400 in BJs Restaurants on October 14, 2024 and sell it today you would lose (60.00) from holding BJs Restaurants or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ORMAT TECHNOLOGIES vs. BJs Restaurants
Performance |
| Timeline |
| ORMAT TECHNOLOGIES |
| BJs Restaurants |
ORMAT TECHNOLOGIES and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ORMAT TECHNOLOGIES and BJs Restaurants
The main advantage of trading using opposite ORMAT TECHNOLOGIES and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| ORMAT TECHNOLOGIES vs. Compagnie Plastic Omnium | ORMAT TECHNOLOGIES vs. Garofalo Health Care | ORMAT TECHNOLOGIES vs. Wenzhou Kangning Hospital | ORMAT TECHNOLOGIES vs. Summit Materials |
| BJs Restaurants vs. FAST RETAIL ADR | BJs Restaurants vs. Australian Agricultural | BJs Restaurants vs. MARKET VECTR RETAIL | BJs Restaurants vs. National Retail Properties |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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