Correlation Between ICL Israel and Bonei Hatichon
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Bonei Hatichon 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 Bonei Hatichon 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 Bonei Hatichon Civil, you can compare the effects of market volatilities on ICL Israel and Bonei Hatichon 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 Bonei Hatichon. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Bonei Hatichon.
Diversification Opportunities for ICL Israel and Bonei Hatichon
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ICL and Bonei is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Bonei Hatichon Civil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonei Hatichon Civil 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 Bonei Hatichon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonei Hatichon Civil has no effect on the direction of ICL Israel i.e., ICL Israel and Bonei Hatichon go up and down completely randomly.
Pair Corralation between ICL Israel and Bonei Hatichon
Assuming the 90 days trading horizon ICL Israel is expected to generate 2.67 times less return on investment than Bonei Hatichon. But when comparing it to its historical volatility, ICL Israel Chemicals is 1.09 times less risky than Bonei Hatichon. It trades about 0.19 of its potential returns per unit of risk. Bonei Hatichon Civil is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 443,900 in Bonei Hatichon Civil on November 28, 2024 and sell it today you would earn a total of 95,200 from holding Bonei Hatichon Civil or generate 21.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICL Israel Chemicals vs. Bonei Hatichon Civil
Performance |
| Timeline |
| ICL Israel Chemicals |
| Bonei Hatichon Civil |
ICL Israel and Bonei Hatichon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Bonei Hatichon
The main advantage of trading using opposite ICL Israel and Bonei Hatichon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Bonei Hatichon 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 Bonei Hatichon will offset losses from the drop in Bonei Hatichon'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 |
| Bonei Hatichon vs. Suny Cellular Communication | Bonei Hatichon vs. ICL Israel Chemicals | Bonei Hatichon vs. Inrom Construction Industries | Bonei Hatichon vs. B Communications |
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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