Correlation Between Feat Fund and Ormat Technologies

Can any of the company-specific risk be diversified away by investing in both Feat Fund 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 Feat Fund and Ormat Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Feat Fund Investments and Ormat Technologies, you can compare the effects of market volatilities on Feat Fund 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 Feat Fund with a short position of Ormat Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feat Fund and Ormat Technologies.

Diversification Opportunities for Feat Fund and Ormat Technologies

-0.48

Correlation Coefficient

Feat Fund  Ormat Technologies

Very good diversification

The 3 months correlation between Feat and Ormat is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Feat Fund Investments and Ormat Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ormat Technologies and Feat Fund 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 Feat Fund Investments 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 Feat Fund i.e., Feat Fund and Ormat Technologies go up and down completely randomly.

Pair Corralation between Feat Fund and Ormat Technologies

Assuming the 90 days trading horizon Feat Fund is expected to generate 1.07 times less return on investment than Ormat Technologies. But when comparing it to its historical volatility, Feat Fund Investments is 1.05 times less risky than Ormat Technologies. It trades about 0.06 of its potential returns per unit of risk. Ormat Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,461,883  in Ormat Technologies on December 29, 2024 and sell it today you would earn a total of  118,117  from holding Ormat Technologies or generate 4.8% return on investment over 90 days.

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

Feat Fund Investments  vs.  Ormat Technologies

Feat Fund Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Feat Fund Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Feat Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ormat Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ormat Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ormat Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Feat Fund and Ormat Technologies

The main advantage of trading using opposite Feat Fund and Ormat Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feat Fund 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' long position.

The idea behind Feat Fund Investments 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.