Correlation Between Ormat Technologies and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Nextera Energy 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 Nextera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and Nextera Energy Partners, you can compare the effects of market volatilities on Ormat Technologies and Nextera Energy 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 Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Nextera Energy.
Diversification Opportunities for Ormat Technologies and Nextera Energy
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ormat and Nextera is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Nextera Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy Partners 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 Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy Partners has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Nextera Energy go up and down completely randomly.
Pair Corralation between Ormat Technologies and Nextera Energy
Considering the 90-day investment horizon Ormat Technologies is expected to generate 0.45 times more return on investment than Nextera Energy. However, Ormat Technologies is 2.22 times less risky than Nextera Energy. It trades about 0.03 of its potential returns per unit of risk. Nextera Energy Partners is currently generating about -0.15 per unit of risk. If you would invest 8,132 in Ormat Technologies on August 28, 2024 and sell it today you would earn a total of 70.00 from holding Ormat Technologies or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ormat Technologies vs. Nextera Energy Partners
Performance |
| Timeline |
| Ormat Technologies |
| Nextera Energy Partners |
Ormat Technologies and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and Nextera Energy
The main advantage of trading using opposite Ormat Technologies and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, Nextera Energy 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.| Ormat Technologies vs. Altus Power | Ormat Technologies vs. Enlight Renewable Energy | Ormat Technologies vs. Fluence Energy | Ormat Technologies vs. Atlantica Sustainable Infrastructure |
| Nextera Energy vs. Brookfield Renewable Corp | Nextera Energy vs. Algonquin Power Utilities | Nextera Energy vs. Clearway Energy Class | Nextera Energy vs. Atlantica Sustainable Infrastructure |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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