Correlation Between ORMAT TECHNOLOGIES and Truist Financial

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and Truist Financial

0.47

Correlation Coefficient

ORMAT TECHNOLOGIES  Truist Financial

Very weak diversification

The 3 months correlation between ORMAT and Truist is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial 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 Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Truist Financial go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and Truist Financial

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to under-perform the Truist Financial. But the stock apears to be less risky and, when comparing its historical volatility, ORMAT TECHNOLOGIES is 1.22 times less risky than Truist Financial. The stock trades about -0.03 of its potential returns per unit of risk. The Truist Financial is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,810  in Truist Financial on October 11, 2024 and sell it today you would earn a total of  433.00  from holding Truist Financial or generate 11.36% return on investment over 90 days.

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

ORMAT TECHNOLOGIES  vs.  Truist Financial

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ORMAT TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Truist Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Truist Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Truist Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ORMAT TECHNOLOGIES and Truist Financial

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

The idea behind ORMAT TECHNOLOGIES and Truist Financial 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.