Correlation Between ICL Israel and IDI Insurance
Can any of the company-specific risk be diversified away by investing in both ICL Israel and IDI Insurance 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 IDI Insurance 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 IDI Insurance, you can compare the effects of market volatilities on ICL Israel and IDI Insurance 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 IDI Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and IDI Insurance.
Diversification Opportunities for ICL Israel and IDI Insurance
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ICL and IDI is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and IDI Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDI Insurance 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 IDI Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDI Insurance has no effect on the direction of ICL Israel i.e., ICL Israel and IDI Insurance go up and down completely randomly.
Pair Corralation between ICL Israel and IDI Insurance
Assuming the 90 days trading horizon ICL Israel is expected to generate 9.23 times less return on investment than IDI Insurance. In addition to that, ICL Israel is 1.13 times more volatile than IDI Insurance. It trades about 0.01 of its total potential returns per unit of risk. IDI Insurance is currently generating about 0.12 per unit of volatility. If you would invest 889,630 in IDI Insurance on September 20, 2024 and sell it today you would earn a total of 459,370 from holding IDI Insurance or generate 51.64% 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. IDI Insurance
Performance |
| Timeline |
| ICL Israel Chemicals |
| IDI Insurance |
ICL Israel and IDI Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and IDI Insurance
The main advantage of trading using opposite ICL Israel and IDI Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, IDI Insurance 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 IDI Insurance will offset losses from the drop in IDI Insurance'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 |
| IDI Insurance vs. Harel Insurance Investments | IDI Insurance vs. Migdal Insurance | IDI Insurance vs. Menora Miv Hld | IDI Insurance vs. The Phoenix Holdings |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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