Correlation Between Ormat Technologies and Migdal Insurance
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Migdal Insurance 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 Migdal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and Migdal Insurance, you can compare the effects of market volatilities on Ormat Technologies and Migdal Insurance 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 Migdal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Migdal Insurance.
Diversification Opportunities for Ormat Technologies and Migdal Insurance
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ormat and Migdal is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Migdal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migdal Insurance 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 Migdal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Migdal Insurance has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Migdal Insurance go up and down completely randomly.
Pair Corralation between Ormat Technologies and Migdal Insurance
Assuming the 90 days trading horizon Ormat Technologies is expected to generate 5.75 times less return on investment than Migdal Insurance. But when comparing it to its historical volatility, Ormat Technologies is 1.25 times less risky than Migdal Insurance. It trades about 0.01 of its potential returns per unit of risk. Migdal Insurance is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 44,264 in Migdal Insurance on August 28, 2024 and sell it today you would earn a total of 19,486 from holding Migdal Insurance or generate 44.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ormat Technologies vs. Migdal Insurance
Performance |
| Timeline |
| Ormat Technologies |
| Migdal Insurance |
Ormat Technologies and Migdal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and Migdal Insurance
The main advantage of trading using opposite Ormat Technologies and Migdal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, Migdal Insurance 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 Migdal Insurance will offset losses from the drop in Migdal Insurance's long position.| Ormat Technologies vs. Elbit Systems | Ormat Technologies vs. Nice | Ormat Technologies vs. Tower Semiconductor | Ormat Technologies vs. Nova |
| Migdal Insurance vs. Harel Insurance Investments | Migdal Insurance vs. Clal Insurance Enterprises | Migdal Insurance vs. Bank Hapoalim | Migdal Insurance vs. Bank Leumi Le Israel |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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