Correlation Between ICL Israel and Itay Financial
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Itay Financial 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 Itay Financial 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 Itay Financial AA, you can compare the effects of market volatilities on ICL Israel and Itay Financial 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 Itay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Itay Financial.
Diversification Opportunities for ICL Israel and Itay Financial
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ICL and Itay is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Itay Financial AA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itay Financial AA 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 Itay Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itay Financial AA has no effect on the direction of ICL Israel i.e., ICL Israel and Itay Financial go up and down completely randomly.
Pair Corralation between ICL Israel and Itay Financial
Assuming the 90 days trading horizon ICL Israel is expected to generate 4.5 times less return on investment than Itay Financial. But when comparing it to its historical volatility, ICL Israel Chemicals is 2.38 times less risky than Itay Financial. It trades about 0.06 of its potential returns per unit of risk. Itay Financial AA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 23,900 in Itay Financial AA on September 13, 2024 and sell it today you would earn a total of 15,000 from holding Itay Financial AA or generate 62.76% 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. Itay Financial AA
Performance |
| Timeline |
| ICL Israel Chemicals |
| Itay Financial AA |
ICL Israel and Itay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Itay Financial
The main advantage of trading using opposite ICL Israel and Itay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Itay Financial 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 Itay Financial will offset losses from the drop in Itay Financial'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 |
| Itay Financial vs. Direct Capital Investments | Itay Financial vs. Netz Hotels | Itay Financial vs. Opal Balance | Itay Financial vs. B Communications |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |