Correlation Between ICL Israel and Israel Op
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Israel Op 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 Op 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 Op L, you can compare the effects of market volatilities on ICL Israel and Israel Op 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 Op. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Israel Op.
Diversification Opportunities for ICL Israel and Israel Op
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ICL and Israel is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Israel Op L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Op L 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 Op. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Op L has no effect on the direction of ICL Israel i.e., ICL Israel and Israel Op go up and down completely randomly.
Pair Corralation between ICL Israel and Israel Op
Assuming the 90 days trading horizon ICL Israel Chemicals is expected to generate 0.44 times more return on investment than Israel Op. However, ICL Israel Chemicals is 2.3 times less risky than Israel Op. It trades about 0.52 of its potential returns per unit of risk. Israel Op L is currently generating about 0.13 per unit of risk. If you would invest 178,700 in ICL Israel Chemicals on October 23, 2024 and sell it today you would earn a total of 32,400 from holding ICL Israel Chemicals or generate 18.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
ICL Israel Chemicals vs. Israel Op L
Performance |
| Timeline |
| ICL Israel Chemicals |
| Israel Op L |
ICL Israel and Israel Op Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Israel Op
The main advantage of trading using opposite ICL Israel and Israel Op positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Israel Op 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 Op will offset losses from the drop in Israel Op's long position.| ICL Israel vs. Bezeq Israeli Telecommunication | ICL Israel vs. Bank Hapoalim | ICL Israel vs. Bank Leumi Le Israel |
| Israel Op vs. The Gold Bond | Israel Op vs. Bank Leumi Le Israel | Israel Op vs. ICL Israel Chemicals | Israel Op vs. Mizrahi Tefahot |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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