Correlation Between Ormat Technologies and ICL Israel
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and ICL Israel 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 ICL Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and ICL Israel Chemicals, you can compare the effects of market volatilities on Ormat Technologies and ICL Israel 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 ICL Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and ICL Israel.
Diversification Opportunities for Ormat Technologies and ICL Israel
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ormat and ICL is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and ICL Israel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICL Israel Chemicals 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 ICL Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICL Israel Chemicals has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and ICL Israel go up and down completely randomly.
Pair Corralation between Ormat Technologies and ICL Israel
Assuming the 90 days trading horizon Ormat Technologies is expected to generate 0.89 times more return on investment than ICL Israel. However, Ormat Technologies is 1.12 times less risky than ICL Israel. It trades about -0.01 of its potential returns per unit of risk. ICL Israel Chemicals is currently generating about -0.06 per unit of risk. If you would invest 2,792,828 in Ormat Technologies on January 20, 2024 and sell it today you would lose (427,828) from holding Ormat Technologies or give up 15.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ormat Technologies vs. ICL Israel Chemicals
Performance |
| Timeline |
| Ormat Technologies |
| ICL Israel Chemicals |
Ormat Technologies and ICL Israel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and ICL Israel
The main advantage of trading using opposite Ormat Technologies and ICL Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, ICL Israel 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 ICL Israel will offset losses from the drop in ICL Israel's long position.| Ormat Technologies vs. Elbit Systems | Ormat Technologies vs. Nice | Ormat Technologies vs. Tower Semiconductor | Ormat Technologies vs. Nova |
| ICL Israel vs. Elbit Systems | ICL Israel vs. Bezeq Israeli Telecommunication | ICL Israel vs. Bank Hapoalim | ICL Israel vs. Teva Pharmaceutical Industries |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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