Correlation Between Ormat Technologies and IBI Mutual

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

By analyzing existing cross correlation between Ormat Technologies and IBI Mutual Funds, you can compare the effects of market volatilities on Ormat Technologies and IBI Mutual 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 IBI Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ormat Technologies and IBI Mutual.

Diversification Opportunities for Ormat Technologies and IBI Mutual

0.58

Correlation Coefficient

Ormat Technologies  IBI Mutual

Very weak diversification

The 3 months correlation between Ormat and IBI is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ormat Technologies and IBI Mutual Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBI Mutual Funds 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 IBI Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBI Mutual Funds has no effect on the direction of Ormat Technologies i.e., Ormat Technologies and IBI Mutual go up and down completely randomly.

Pair Corralation between Ormat Technologies and IBI Mutual

Assuming the 90 days trading horizon Ormat Technologies is expected to under-perform the IBI Mutual. But the stock apears to be less risky and, when comparing its historical volatility, Ormat Technologies is 1.42 times less risky than IBI Mutual. The stock trades about -0.58 of its potential returns per unit of risk. The IBI Mutual Funds is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  7,910  in IBI Mutual Funds on September 21, 2024 and sell it today you would lose (160.00) from holding IBI Mutual Funds or give up 2.02% 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.  IBI Mutual Funds

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. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

IBI Mutual Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IBI Mutual Funds are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, IBI Mutual sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ormat Technologies and IBI Mutual

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

The idea behind Ormat Technologies and IBI Mutual Funds 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.