Correlation Between ICL Israel and Big Tech
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Big Tech 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 Big Tech 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 Big Tech 50, you can compare the effects of market volatilities on ICL Israel and Big Tech 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 Big Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Big Tech.
Diversification Opportunities for ICL Israel and Big Tech
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ICL and Big is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Big Tech 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Tech 50 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 Big Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Tech 50 has no effect on the direction of ICL Israel i.e., ICL Israel and Big Tech go up and down completely randomly.
Pair Corralation between ICL Israel and Big Tech
Assuming the 90 days trading horizon ICL Israel Chemicals is expected to generate 0.79 times more return on investment than Big Tech. However, ICL Israel Chemicals is 1.26 times less risky than Big Tech. It trades about -0.02 of its potential returns per unit of risk. Big Tech 50 is currently generating about -0.04 per unit of risk. If you would invest 192,394 in ICL Israel Chemicals on August 31, 2024 and sell it today you would lose (28,394) from holding ICL Israel Chemicals or give up 14.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICL Israel Chemicals vs. Big Tech 50
Performance |
| Timeline |
| ICL Israel Chemicals |
| Big Tech 50 |
ICL Israel and Big Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Big Tech
The main advantage of trading using opposite ICL Israel and Big Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Big Tech 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 Big Tech will offset losses from the drop in Big Tech's long position.| ICL Israel vs. Elbit Systems | ICL Israel vs. Bezeq Israeli Telecommunication | ICL Israel vs. Bank Hapoalim | ICL Israel vs. Teva Pharmaceutical Industries |
| Big Tech vs. Generation Capital | Big Tech vs. Meitav Dash Investments | Big Tech vs. IBI Inv House | Big Tech vs. Mivtach Shamir |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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