Correlation Between Ormat Technologies and Elbit Systems
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Elbit Systems 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 Elbit Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and Elbit Systems, you can compare the effects of market volatilities on Ormat Technologies and Elbit Systems 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 Elbit Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Elbit Systems.
Diversification Opportunities for Ormat Technologies and Elbit Systems
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ormat and Elbit is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Elbit Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elbit 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 Elbit Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elbit Systems has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Elbit Systems go up and down completely randomly.
Pair Corralation between Ormat Technologies and Elbit Systems
Assuming the 90 days trading horizon Ormat Technologies is expected to generate 3.62 times less return on investment than Elbit Systems. In addition to that, Ormat Technologies is 1.16 times more volatile than Elbit Systems. It trades about 0.01 of its total potential returns per unit of risk. Elbit Systems is currently generating about 0.06 per unit of volatility. If you would invest 7,615,743 in Elbit Systems on August 27, 2024 and sell it today you would earn a total of 1,644,257 from holding Elbit Systems or generate 21.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ormat Technologies vs. Elbit Systems
Performance |
| Timeline |
| Ormat Technologies |
| Elbit Systems |
Ormat Technologies and Elbit Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and Elbit Systems
The main advantage of trading using opposite Ormat Technologies and Elbit Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, Elbit Systems 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 Elbit Systems will offset losses from the drop in Elbit Systems' long position.| Ormat Technologies vs. Elbit Systems | Ormat Technologies vs. Nice | Ormat Technologies vs. Tower Semiconductor | Ormat Technologies vs. Nova |
| Elbit Systems vs. Arad | Elbit Systems vs. Alony Hetz Properties | Elbit Systems vs. Danel | Elbit Systems vs. Airport City |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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