Correlation Between Ormat Technologies and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Algonquin Power 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 Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and Algonquin Power Utilities, you can compare the effects of market volatilities on Ormat Technologies and Algonquin Power 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 Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Algonquin Power.
Diversification Opportunities for Ormat Technologies and Algonquin Power
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ormat and Algonquin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities 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 Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Algonquin Power go up and down completely randomly.
Pair Corralation between Ormat Technologies and Algonquin Power
Considering the 90-day investment horizon Ormat Technologies is expected to generate 0.93 times more return on investment than Algonquin Power. However, Ormat Technologies is 1.08 times less risky than Algonquin Power. It trades about -0.03 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.03 per unit of risk. If you would invest 8,795 in Ormat Technologies on November 9, 2024 and sell it today you would lose (2,374) from holding Ormat Technologies or give up 26.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ormat Technologies vs. Algonquin Power Utilities
Performance |
| Timeline |
| Ormat Technologies |
| Algonquin Power Utilities |
Ormat Technologies and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and Algonquin Power
The main advantage of trading using opposite Ormat Technologies and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, Algonquin Power 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| Ormat Technologies vs. Altus Power | Ormat Technologies vs. Enlight Renewable Energy | Ormat Technologies vs. Fluence Energy | Ormat Technologies vs. Clearway Energy |
| Algonquin Power vs. Brookfield Renewable Corp | Algonquin Power vs. Nextera Energy Partners | Algonquin Power vs. Clearway Energy Class | Algonquin Power vs. Clearway Energy |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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