Correlation Between Ormat Technologies and Verde Clean
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Verde Clean 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 Verde Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and Verde Clean Fuels, you can compare the effects of market volatilities on Ormat Technologies and Verde Clean 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 Verde Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Verde Clean.
Diversification Opportunities for Ormat Technologies and Verde Clean
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ormat and Verde is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Verde Clean Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verde Clean Fuels 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 Verde Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verde Clean Fuels has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Verde Clean go up and down completely randomly.
Pair Corralation between Ormat Technologies and Verde Clean
Considering the 90-day investment horizon Ormat Technologies is expected to generate 0.58 times more return on investment than Verde Clean. However, Ormat Technologies is 1.72 times less risky than Verde Clean. It trades about -0.2 of its potential returns per unit of risk. Verde Clean Fuels is currently generating about -0.19 per unit of risk. If you would invest 6,891 in Ormat Technologies on November 4, 2024 and sell it today you would lose (476.00) from holding Ormat Technologies or give up 6.91% 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. Verde Clean Fuels
Performance |
| Timeline |
| Ormat Technologies |
| Verde Clean Fuels |
Ormat Technologies and Verde Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and Verde Clean
The main advantage of trading using opposite Ormat Technologies and Verde Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, Verde Clean 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 Verde Clean will offset losses from the drop in Verde Clean's long position.| Ormat Technologies vs. Altus Power | Ormat Technologies vs. Enlight Renewable Energy | Ormat Technologies vs. Fluence Energy | Ormat Technologies vs. Clearway Energy |
| Verde Clean vs. Brenmiller Energy Ltd | Verde Clean vs. Advent Technologies Holdings | Verde Clean vs. Fusion Fuel Green | Verde Clean vs. Orsted AS ADR |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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