Correlation Between Nordson and Ormat Technologies

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

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

Diversification Opportunities for Nordson and Ormat Technologies

0.8

Correlation Coefficient

Nordson  Ormat Technologies

Very poor diversification

The 3 months correlation between Nordson and Ormat is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nordson and Ormat Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ormat Technologies and Nordson 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 Nordson are associated (or correlated) with Ormat Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ormat Technologies has no effect on the direction of Nordson i.e., Nordson and Ormat Technologies go up and down completely randomly.

Pair Corralation between Nordson and Ormat Technologies

Given the investment horizon of 90 days Nordson is expected to generate 75.65 times less return on investment than Ormat Technologies. But when comparing it to its historical volatility, Nordson is 1.13 times less risky than Ormat Technologies. It trades about 0.0 of its potential returns per unit of risk. Ormat Technologies is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  7,512  in Ormat Technologies on May 6, 2025 and sell it today you would earn a total of  1,326  from holding Ormat Technologies or generate 17.65% return on investment over 90 days.

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

Nordson  vs.  Ormat Technologies

Nordson

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordson are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Nordson displayed solid returns over the last few months and may actually be approaching a breakup point.

Ormat Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ormat Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Ormat Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordson and Ormat Technologies

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

The idea behind Nordson and Ormat Technologies 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 Global Correlations module to find global opportunities by holding instruments from different markets.