Correlation Between Ormat Technologies and El Al
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and El Al 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 El Al into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and El Al Israel, you can compare the effects of market volatilities on Ormat Technologies and El Al 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 El Al. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and El Al.
Diversification Opportunities for Ormat Technologies and El Al
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ormat and ELAL is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and El Al Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Al Israel 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 El Al. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Al Israel has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and El Al go up and down completely randomly.
Pair Corralation between Ormat Technologies and El Al
Assuming the 90 days trading horizon Ormat Technologies is expected to generate 0.29 times more return on investment than El Al. However, Ormat Technologies is 3.49 times less risky than El Al. It trades about -0.03 of its potential returns per unit of risk. El Al Israel is currently generating about -0.08 per unit of risk. If you would invest 2,972,799 in Ormat Technologies on September 1, 2024 and sell it today you would lose (22,799) from holding Ormat Technologies or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ormat Technologies vs. El Al Israel
Performance |
| Timeline |
| Ormat Technologies |
| El Al Israel |
Ormat Technologies and El Al Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and El Al
The main advantage of trading using opposite Ormat Technologies and El Al positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, El Al 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 El Al will offset losses from the drop in El Al's long position.| Ormat Technologies vs. Elbit Systems | Ormat Technologies vs. Nice | Ormat Technologies vs. Tower Semiconductor | Ormat Technologies vs. Nova |
| El Al vs. Arad | El Al vs. Alony Hetz Properties | El Al vs. Airport City | El Al vs. Harel Insurance Investments |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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