Correlation Between ICL Israel and Libra Insurance
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Libra 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 Libra 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 Libra Insurance, you can compare the effects of market volatilities on ICL Israel and Libra 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 Libra Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Libra Insurance.
Diversification Opportunities for ICL Israel and Libra Insurance
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ICL and Libra is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Libra Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libra 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 Libra Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libra Insurance has no effect on the direction of ICL Israel i.e., ICL Israel and Libra Insurance go up and down completely randomly.
Pair Corralation between ICL Israel and Libra Insurance
Assuming the 90 days trading horizon ICL Israel is expected to generate 22.28 times less return on investment than Libra Insurance. But when comparing it to its historical volatility, ICL Israel Chemicals is 1.23 times less risky than Libra Insurance. It trades about 0.01 of its potential returns per unit of risk. Libra Insurance is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 35,331 in Libra Insurance on September 20, 2024 and sell it today you would earn a total of 63,039 from holding Libra Insurance or generate 178.42% 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. Libra Insurance
Performance |
| Timeline |
| ICL Israel Chemicals |
| Libra Insurance |
ICL Israel and Libra Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Libra Insurance
The main advantage of trading using opposite ICL Israel and Libra Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Libra 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 Libra Insurance will offset losses from the drop in Libra 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 |
| Libra Insurance vs. IBI Mutual Funds | Libra Insurance vs. Petrochemical | Libra Insurance vs. Hiron Trade Investments Industrial | Libra Insurance vs. YD More 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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