Correlation Between ORMAT TECHNOLOGIES and Volkswagen

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

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

Diversification Opportunities for ORMAT TECHNOLOGIES and Volkswagen

-0.85

Correlation Coefficient

ORMAT TECHNOLOGIES  Volkswagen

Pay attention - limited upside

The 3 months correlation between ORMAT and Volkswagen is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and Volkswagen go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and Volkswagen

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.8 times more return on investment than Volkswagen. However, ORMAT TECHNOLOGIES is 1.25 times less risky than Volkswagen. It trades about 0.12 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.06 per unit of risk. If you would invest  6,765  in ORMAT TECHNOLOGIES on September 13, 2024 and sell it today you would earn a total of  725.00  from holding ORMAT TECHNOLOGIES or generate 10.72% return on investment over 90 days.

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

ORMAT TECHNOLOGIES  vs.  Volkswagen AG

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ORMAT TECHNOLOGIES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ORMAT TECHNOLOGIES may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Volkswagen AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with ORMAT TECHNOLOGIES and Volkswagen

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

The idea behind ORMAT TECHNOLOGIES and Volkswagen AG 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.