Correlation Between ORMAT TECHNOLOGIES and SOFI TECHNOLOGIES

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and SOFI TECHNOLOGIES

-0.48

Correlation Coefficient

ORMAT TECHNOLOGIES  SOFI TECHNOLOGIES

Very good diversification

The 3 months correlation between ORMAT and SOFI is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFI TECHNOLOGIES has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and SOFI TECHNOLOGIES go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and SOFI TECHNOLOGIES

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.39 times more return on investment than SOFI TECHNOLOGIES. However, ORMAT TECHNOLOGIES is 2.56 times less risky than SOFI TECHNOLOGIES. It trades about 0.02 of its potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about -0.06 per unit of risk. If you would invest  6,429  in ORMAT TECHNOLOGIES on December 28, 2024 and sell it today you would earn a total of  77.00  from holding ORMAT TECHNOLOGIES or generate 1.2% return on investment over 90 days.

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

ORMAT TECHNOLOGIES  vs.  SOFI TECHNOLOGIES

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

SOFI TECHNOLOGIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days SOFI TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ORMAT TECHNOLOGIES and SOFI TECHNOLOGIES

The main advantage of trading using opposite ORMAT TECHNOLOGIES and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, SOFI 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 SOFI TECHNOLOGIES will offset losses from the drop in SOFI TECHNOLOGIES's long position.

The idea behind ORMAT TECHNOLOGIES and SOFI 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.