Correlation Between ICL Israel and Brainsway
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Brainsway 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 Brainsway 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 Brainsway, you can compare the effects of market volatilities on ICL Israel and Brainsway 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 Brainsway. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Brainsway.
Diversification Opportunities for ICL Israel and Brainsway
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ICL and Brainsway is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway 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 Brainsway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainsway has no effect on the direction of ICL Israel i.e., ICL Israel and Brainsway go up and down completely randomly.
Pair Corralation between ICL Israel and Brainsway
Assuming the 90 days trading horizon ICL Israel Chemicals is expected to generate 0.9 times more return on investment than Brainsway. However, ICL Israel Chemicals is 1.11 times less risky than Brainsway. It trades about 0.22 of its potential returns per unit of risk. Brainsway is currently generating about -0.04 per unit of risk. If you would invest 152,700 in ICL Israel Chemicals on August 29, 2024 and sell it today you would earn a total of 17,300 from holding ICL Israel Chemicals or generate 11.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICL Israel Chemicals vs. Brainsway
Performance |
| Timeline |
| ICL Israel Chemicals |
| Brainsway |
ICL Israel and Brainsway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Brainsway
The main advantage of trading using opposite ICL Israel and Brainsway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Brainsway 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 Brainsway will offset losses from the drop in Brainsway'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 |
| Brainsway vs. Ilex Medical | Brainsway vs. First International Bank | Brainsway vs. Elbit Medical Technologies | Brainsway vs. RSL Electronics |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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