Correlation Between TOTAL GABON and ORMAT TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both TOTAL GABON and ORMAT TECHNOLOGIES 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 TOTAL GABON and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOTAL GABON and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on TOTAL GABON and ORMAT TECHNOLOGIES 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 TOTAL GABON with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTAL GABON and ORMAT TECHNOLOGIES.
Diversification Opportunities for TOTAL GABON and ORMAT TECHNOLOGIES
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between TOTAL and ORMAT is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding TOTAL GABON and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and TOTAL GABON 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 TOTAL GABON are associated (or correlated) with ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of TOTAL GABON i.e., TOTAL GABON and ORMAT TECHNOLOGIES go up and down completely randomly.
Pair Corralation between TOTAL GABON and ORMAT TECHNOLOGIES
Assuming the 90 days trading horizon TOTAL GABON is expected to generate 1.92 times more return on investment than ORMAT TECHNOLOGIES. However, TOTAL GABON is 1.92 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.11 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about 0.18 per unit of risk. If you would invest 15,550 in TOTAL GABON on September 3, 2024 and sell it today you would earn a total of 2,850 from holding TOTAL GABON or generate 18.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOTAL GABON vs. ORMAT TECHNOLOGIES
Performance |
| Timeline |
| TOTAL GABON |
| ORMAT TECHNOLOGIES |
TOTAL GABON and ORMAT TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOTAL GABON and ORMAT TECHNOLOGIES
The main advantage of trading using opposite TOTAL GABON and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTAL GABON position performs unexpectedly, ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES will offset losses from the drop in ORMAT TECHNOLOGIES's long position.| TOTAL GABON vs. TOTAL BANGUN PERSAD | TOTAL GABON vs. TOTAL BANGUN PERSAD | TOTAL GABON vs. TOTAL ENERGY SERVS | TOTAL GABON vs. Anheuser Busch InBev SANV |
| ORMAT TECHNOLOGIES vs. TOTAL GABON | ORMAT TECHNOLOGIES vs. Walgreens Boots Alliance | ORMAT TECHNOLOGIES vs. Banco Santander SA | ORMAT TECHNOLOGIES vs. Peak Resources Limited |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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