Correlation Between Meshek Energy and Ormat Technologies
Can any of the company-specific risk be diversified away by investing in both Meshek Energy and Ormat 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 Meshek Energy and Ormat Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meshek Energy Renewable Energies and Ormat Technologies, you can compare the effects of market volatilities on Meshek Energy and Ormat 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 Meshek Energy with a short position of Ormat Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meshek Energy and Ormat Technologies.
Diversification Opportunities for Meshek Energy and Ormat Technologies
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meshek and Ormat is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Meshek Energy Renewable Energi and Ormat Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ormat Technologies and Meshek Energy 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 Meshek Energy Renewable Energies are associated (or correlated) with Ormat Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ormat Technologies has no effect on the direction of Meshek Energy i.e., Meshek Energy and Ormat Technologies go up and down completely randomly.
Pair Corralation between Meshek Energy and Ormat Technologies
Assuming the 90 days trading horizon Meshek Energy Renewable Energies is expected to generate 3.35 times more return on investment than Ormat Technologies. However, Meshek Energy is 3.35 times more volatile than Ormat Technologies. It trades about 0.04 of its potential returns per unit of risk. Ormat Technologies is currently generating about 0.11 per unit of risk. If you would invest 18,050 in Meshek Energy Renewable Energies on August 25, 2024 and sell it today you would earn a total of 480.00 from holding Meshek Energy Renewable Energies or generate 2.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meshek Energy Renewable Energi vs. Ormat Technologies
Performance |
| Timeline |
| Meshek Energy Renewable |
| Ormat Technologies |
Meshek Energy and Ormat Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meshek Energy and Ormat Technologies
The main advantage of trading using opposite Meshek Energy and Ormat Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meshek Energy position performs unexpectedly, Ormat 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 Ormat Technologies will offset losses from the drop in Ormat Technologies' long position.| Meshek Energy vs. Enlight Renewable Energy | Meshek Energy vs. Energix Renewable Energies | Meshek Energy vs. Brainsway | Meshek Energy vs. Mivne Real Estate |
| Ormat Technologies vs. Elbit Systems | Ormat Technologies vs. Nice | Ormat Technologies vs. Tower Semiconductor | Ormat Technologies vs. Nova |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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