Correlation Between Ormat Technologies and Formula
Can any of the company-specific risk be diversified away by investing in both Ormat Technologies and Formula 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 Formula into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ormat Technologies and Formula, you can compare the effects of market volatilities on Ormat Technologies and Formula 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 Formula. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and Formula.
Diversification Opportunities for Ormat Technologies and Formula
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ormat and Formula is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and Formula in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formula 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 Formula. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formula has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and Formula go up and down completely randomly.
Pair Corralation between Ormat Technologies and Formula
Assuming the 90 days trading horizon Ormat Technologies is expected to generate 0.75 times more return on investment than Formula. However, Ormat Technologies is 1.33 times less risky than Formula. It trades about 0.26 of its potential returns per unit of risk. Formula is currently generating about 0.14 per unit of risk. If you would invest 3,046,585 in Ormat Technologies on September 2, 2025 and sell it today you would earn a total of 654,415 from holding Ormat Technologies or generate 21.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ormat Technologies vs. Formula
Performance |
| Timeline |
| Ormat Technologies |
| Formula |
Ormat Technologies and Formula Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ormat Technologies and Formula
The main advantage of trading using opposite Ormat Technologies and Formula positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ormat Technologies position performs unexpectedly, Formula 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 Formula will offset losses from the drop in Formula's long position.| Ormat Technologies vs. Inrom Construction Industries | Ormat Technologies vs. IDI Insurance | Ormat Technologies vs. Willy Food | Ormat Technologies vs. YH Dimri Construction |
| Formula vs. Analyst IMS Investment | Formula vs. Adgar Investments and | Formula vs. Suny Cellular Communication | Formula vs. Sure Tech Investments LP |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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