Correlation Between Expeditors International and ORMAT TECHNOLOGIES

Can any of the company-specific risk be diversified away by investing in both Expeditors International 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 Expeditors International and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Expeditors International of and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on Expeditors International 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 Expeditors International with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expeditors International and ORMAT TECHNOLOGIES.

Diversification Opportunities for Expeditors International and ORMAT TECHNOLOGIES

0.25

Correlation Coefficient

Expeditors International  ORMAT TECHNOLOGIES

Modest diversification

The 3 months correlation between Expeditors and ORMAT is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Expeditors International of and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and Expeditors International 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 Expeditors International of 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 Expeditors International i.e., Expeditors International and ORMAT TECHNOLOGIES go up and down completely randomly.

Pair Corralation between Expeditors International and ORMAT TECHNOLOGIES

Assuming the 90 days trading horizon Expeditors International is expected to generate 1.83 times less return on investment than ORMAT TECHNOLOGIES. But when comparing it to its historical volatility, Expeditors International of is 1.17 times less risky than ORMAT TECHNOLOGIES. It trades about 0.01 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,513  in ORMAT TECHNOLOGIES on December 23, 2024 and sell it today you would earn a total of  69.00  from holding ORMAT TECHNOLOGIES or generate 1.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Expeditors International of  vs.  ORMAT TECHNOLOGIES

Expeditors International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Expeditors International of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Expeditors International is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ORMAT TECHNOLOGIES are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ORMAT TECHNOLOGIES is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Expeditors International and ORMAT TECHNOLOGIES

The main advantage of trading using opposite Expeditors International and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expeditors International 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.

The idea behind Expeditors International of and ORMAT TECHNOLOGIES pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Valuation module to check real value of public entities based on technical and fundamental data.