Correlation Between Ormat Technologies and B Communications
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and B Communications 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 B Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and B Communications, you can compare the effects of market volatilities on Ormat Technologies and B Communications 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 B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and B Communications.
Diversification Opportunities for Ormat Technologies and B Communications
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ormat and BCOM is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications 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 B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and B Communications go up and down completely randomly.
Pair Corralation between Ormat Technologies and B Communications
Assuming the 90 days trading horizon Ormat Technologies is expected to generate 1.08 times more return on investment than B Communications. However, Ormat Technologies is 1.08 times more volatile than B Communications. It trades about 0.19 of its potential returns per unit of risk. B Communications is currently generating about 0.16 per unit of risk. If you would invest 2,347,000 in Ormat Technologies on November 27, 2024 and sell it today you would earn a total of 135,000 from holding Ormat Technologies or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ormat Technologies vs. B Communications
Performance |
| Timeline |
| Ormat Technologies |
| B Communications |
Ormat Technologies and B Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and B Communications
The main advantage of trading using opposite Ormat Technologies and B Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, B Communications 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 B Communications will offset losses from the drop in B Communications' long position.| Ormat Technologies vs. Elbit Systems | Ormat Technologies vs. Nice | Ormat Technologies vs. Tower Semiconductor | Ormat Technologies vs. Nova |
| B Communications vs. Bezeq Israeli Telecommunication | B Communications vs. Partner | B Communications vs. Cellcom Israel | B Communications vs. Tower Semiconductor |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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