Correlation Between ORMAT TECHNOLOGIES and TRAVEL +

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

By analyzing existing cross correlation between ORMAT TECHNOLOGIES and TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and TRAVEL + 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 TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and TRAVEL +.

Diversification Opportunities for ORMAT TECHNOLOGIES and TRAVEL +

0.43

Correlation Coefficient

ORMAT TECHNOLOGIES  TRAVEL +

Very weak diversification

The 3 months correlation between ORMAT and TRAVEL is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and TRAVEL + go up and down completely randomly.

Pair Corralation between ORMAT TECHNOLOGIES and TRAVEL +

Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to under-perform the TRAVEL +. In addition to that, ORMAT TECHNOLOGIES is 1.66 times more volatile than TRAVEL LEISURE DL 01. It trades about -0.32 of its total potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about -0.31 per unit of volatility. If you would invest  5,149  in TRAVEL LEISURE DL 01 on October 8, 2024 and sell it today you would lose (309.00) from holding TRAVEL LEISURE DL 01 or give up 6.0% of portfolio value over 90 days.

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

ORMAT TECHNOLOGIES  vs.  TRAVEL LEISURE DL 01

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

TRAVEL LEISURE DL

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ORMAT TECHNOLOGIES and TRAVEL +

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

The idea behind ORMAT TECHNOLOGIES and TRAVEL LEISURE DL 01 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.