Correlation Between Ormat Technologies and Enlight Renewable
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Enlight Renewable 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 Enlight Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and Enlight Renewable Energy, you can compare the effects of market volatilities on Ormat Technologies and Enlight Renewable 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 Enlight Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Enlight Renewable.
Diversification Opportunities for Ormat Technologies and Enlight Renewable
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ormat and Enlight is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy 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 Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Enlight Renewable go up and down completely randomly.
Pair Corralation between Ormat Technologies and Enlight Renewable
Assuming the 90 days trading horizon Ormat Technologies is expected to under-perform the Enlight Renewable. But the stock apears to be less risky and, when comparing its historical volatility, Ormat Technologies is 1.22 times less risky than Enlight Renewable. The stock trades about -0.05 of its potential returns per unit of risk. The Enlight Renewable Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 585,000 in Enlight Renewable Energy on January 25, 2024 and sell it today you would earn a total of 30,900 from holding Enlight Renewable Energy or generate 5.28% 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. Enlight Renewable Energy
Performance |
| Timeline |
| Ormat Technologies |
| Enlight Renewable Energy |
Ormat Technologies and Enlight Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and Enlight Renewable
The main advantage of trading using opposite Ormat Technologies and Enlight Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, Enlight Renewable 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 Enlight Renewable will offset losses from the drop in Enlight Renewable's long position.| Ormat Technologies vs. Elbit Systems | Ormat Technologies vs. Nice | Ormat Technologies vs. Tower Semiconductor | Ormat Technologies vs. Nova |
| Enlight Renewable vs. Doral Group Renewable | Enlight Renewable vs. Elbit Systems | Enlight Renewable vs. Electreon Wireless | Enlight Renewable vs. Delek Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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