Correlation Between ICL Israel and Cellcom Israel
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Cellcom Israel 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 Cellcom Israel 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 Cellcom Israel, you can compare the effects of market volatilities on ICL Israel and Cellcom Israel 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 Cellcom Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Cellcom Israel.
Diversification Opportunities for ICL Israel and Cellcom Israel
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ICL and Cellcom is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Cellcom Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellcom Israel 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 Cellcom Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellcom Israel has no effect on the direction of ICL Israel i.e., ICL Israel and Cellcom Israel go up and down completely randomly.
Pair Corralation between ICL Israel and Cellcom Israel
Assuming the 90 days trading horizon ICL Israel is expected to generate 1.3 times less return on investment than Cellcom Israel. But when comparing it to its historical volatility, ICL Israel Chemicals is 1.29 times less risky than Cellcom Israel. It trades about 0.32 of its potential returns per unit of risk. Cellcom Israel is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 171,500 in Cellcom Israel on September 12, 2024 and sell it today you would earn a total of 31,500 from holding Cellcom Israel or generate 18.37% 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. Cellcom Israel
Performance |
| Timeline |
| ICL Israel Chemicals |
| Cellcom Israel |
ICL Israel and Cellcom Israel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Cellcom Israel
The main advantage of trading using opposite ICL Israel and Cellcom Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Cellcom Israel 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 Cellcom Israel will offset losses from the drop in Cellcom Israel'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 |
| Cellcom Israel vs. Ormat Technologies | Cellcom Israel vs. ICL Israel Chemicals | Cellcom Israel vs. Technoplus Ventures | Cellcom Israel vs. TAT Technologies |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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