Correlation Between ICL Israel and Azrieli
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Azrieli 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 ICL Israel and Azrieli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICL Israel Chemicals and Azrieli Group, you can compare the effects of market volatilities on ICL Israel and Azrieli 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 ICL Israel with a short position of Azrieli. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Azrieli.
Diversification Opportunities for ICL Israel and Azrieli
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ICL and Azrieli is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Azrieli Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azrieli Group and ICL Israel 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 ICL Israel Chemicals are associated (or correlated) with Azrieli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azrieli Group has no effect on the direction of ICL Israel i.e., ICL Israel and Azrieli go up and down completely randomly.
Pair Corralation between ICL Israel and Azrieli
Assuming the 90 days trading horizon ICL Israel is expected to generate 3.97 times less return on investment than Azrieli. In addition to that, ICL Israel is 1.2 times more volatile than Azrieli Group. It trades about 0.04 of its total potential returns per unit of risk. Azrieli Group is currently generating about 0.19 per unit of volatility. If you would invest 2,470,000 in Azrieli Group on August 29, 2024 and sell it today you would earn a total of 470,000 from holding Azrieli Group or generate 19.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICL Israel Chemicals vs. Azrieli Group
Performance |
| Timeline |
| ICL Israel Chemicals |
| Azrieli Group |
ICL Israel and Azrieli Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Azrieli
The main advantage of trading using opposite ICL Israel and Azrieli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Azrieli 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 Azrieli will offset losses from the drop in Azrieli's long position.| ICL Israel vs. Elbit Systems | ICL Israel vs. Bezeq Israeli Telecommunication | ICL Israel vs. Teva Pharmaceutical Industries | ICL Israel vs. Bank Leumi Le Israel |
| Azrieli vs. Melisron | Azrieli vs. Bank Leumi Le Israel | Azrieli vs. Bank Hapoalim | Azrieli vs. Amot Investments |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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