Correlation Between ICL Israel and Isras Investment
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Isras Investment 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 Isras Investment 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 Isras Investment, you can compare the effects of market volatilities on ICL Israel and Isras Investment 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 Isras Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Isras Investment.
Diversification Opportunities for ICL Israel and Isras Investment
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ICL and Isras is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Isras Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isras Investment 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 Isras Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isras Investment has no effect on the direction of ICL Israel i.e., ICL Israel and Isras Investment go up and down completely randomly.
Pair Corralation between ICL Israel and Isras Investment
Assuming the 90 days trading horizon ICL Israel is expected to generate 1.45 times less return on investment than Isras Investment. In addition to that, ICL Israel is 1.42 times more volatile than Isras Investment. It trades about 0.05 of its total potential returns per unit of risk. Isras Investment is currently generating about 0.11 per unit of volatility. If you would invest 6,791,203 in Isras Investment on October 22, 2024 and sell it today you would earn a total of 2,256,797 from holding Isras Investment or generate 33.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICL Israel Chemicals vs. Isras Investment
Performance |
| Timeline |
| ICL Israel Chemicals |
| Isras Investment |
ICL Israel and Isras Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Isras Investment
The main advantage of trading using opposite ICL Israel and Isras Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Isras Investment 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 Isras Investment will offset losses from the drop in Isras Investment'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 |
| Isras Investment vs. Alony Hetz Properties | Isras Investment vs. Fox Wizel | Isras Investment vs. Amot Investments | Isras Investment vs. Harel Insurance Investments |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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