Correlation Between ORMAT TECHNOLOGIES and CAL MAINE
Can any of the company-specific risk be diversified away by investing in both ORMAT TECHNOLOGIES and CAL MAINE 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 CAL MAINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ORMAT TECHNOLOGIES and CAL MAINE FOODS, you can compare the effects of market volatilities on ORMAT TECHNOLOGIES and CAL MAINE 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 CAL MAINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORMAT TECHNOLOGIES and CAL MAINE.
Diversification Opportunities for ORMAT TECHNOLOGIES and CAL MAINE
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ORMAT and CAL is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ORMAT TECHNOLOGIES and CAL MAINE FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAL MAINE FOODS 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 CAL MAINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAL MAINE FOODS has no effect on the direction of ORMAT TECHNOLOGIES i.e., ORMAT TECHNOLOGIES and CAL MAINE go up and down completely randomly.
Pair Corralation between ORMAT TECHNOLOGIES and CAL MAINE
Assuming the 90 days trading horizon ORMAT TECHNOLOGIES is expected to generate 0.94 times more return on investment than CAL MAINE. However, ORMAT TECHNOLOGIES is 1.06 times less risky than CAL MAINE. It trades about 0.18 of its potential returns per unit of risk. CAL MAINE FOODS is currently generating about 0.13 per unit of risk. If you would invest 6,366 in ORMAT TECHNOLOGIES on April 23, 2025 and sell it today you would earn a total of 1,276 from holding ORMAT TECHNOLOGIES or generate 20.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
ORMAT TECHNOLOGIES vs. CAL MAINE FOODS
Performance |
Timeline |
ORMAT TECHNOLOGIES |
CAL MAINE FOODS |
ORMAT TECHNOLOGIES and CAL MAINE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ORMAT TECHNOLOGIES and CAL MAINE
The main advantage of trading using opposite ORMAT TECHNOLOGIES and CAL MAINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORMAT TECHNOLOGIES position performs unexpectedly, CAL MAINE 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 CAL MAINE will offset losses from the drop in CAL MAINE's long position.ORMAT TECHNOLOGIES vs. KENEDIX OFFICE INV | ORMAT TECHNOLOGIES vs. Mitsui Chemicals | ORMAT TECHNOLOGIES vs. Broadwind | ORMAT TECHNOLOGIES vs. Gamma Communications plc |
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Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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