Correlation Between ORMAT TECHNOLOGIES and Newmont

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and Newmont

-0.13

Correlation Coefficient

ORMAT TECHNOLOGIES  Newmont

Good diversification

The 3 months correlation between ORMAT and Newmont is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Newmont go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and Newmont

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 34.01 times less return on investment than Newmont. But when comparing it to its historical volatility, ORMAT TECHNOLOGIES is 1.15 times less risky than Newmont. It trades about 0.01 of its potential returns per unit of risk. Newmont is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,641  in Newmont on December 21, 2024 and sell it today you would earn a total of  757.00  from holding Newmont or generate 20.79% return on investment over 90 days.

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

ORMAT TECHNOLOGIES  vs.  Newmont

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

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.

Newmont

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Newmont unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ORMAT TECHNOLOGIES and Newmont

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

The idea behind ORMAT TECHNOLOGIES and Newmont 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.