Correlation Between ICL Israel and Israel Land
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Israel Land 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 Israel Land 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 Israel Land Development, you can compare the effects of market volatilities on ICL Israel and Israel Land 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 Israel Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Israel Land.
Diversification Opportunities for ICL Israel and Israel Land
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ICL and Israel is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Israel Land Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Land Development 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 Israel Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Land Development has no effect on the direction of ICL Israel i.e., ICL Israel and Israel Land go up and down completely randomly.
Pair Corralation between ICL Israel and Israel Land
Assuming the 90 days trading horizon ICL Israel Chemicals is expected to generate 1.74 times more return on investment than Israel Land. However, ICL Israel is 1.74 times more volatile than Israel Land Development. It trades about 0.22 of its potential returns per unit of risk. Israel Land Development is currently generating about 0.2 per unit of risk. If you would invest 152,700 in ICL Israel Chemicals on August 25, 2024 and sell it today you would earn a total of 16,200 from holding ICL Israel Chemicals or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICL Israel Chemicals vs. Israel Land Development
Performance |
| Timeline |
| ICL Israel Chemicals |
| Israel Land Development |
ICL Israel and Israel Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Israel Land
The main advantage of trading using opposite ICL Israel and Israel Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Israel Land 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 Israel Land will offset losses from the drop in Israel Land'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 |
| Israel Land vs. Israel Land Development | Israel Land vs. Lapidoth | Israel Land vs. Ilex Medical | Israel Land vs. Aerodrome Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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