Correlation Between ICL Israel and Millennium Food
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Millennium Food 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 Millennium Food 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 Millennium Food Tech LP, you can compare the effects of market volatilities on ICL Israel and Millennium Food 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 Millennium Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Millennium Food.
Diversification Opportunities for ICL Israel and Millennium Food
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between ICL and Millennium is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Millennium Food Tech LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millennium Food Tech 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 Millennium Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millennium Food Tech has no effect on the direction of ICL Israel i.e., ICL Israel and Millennium Food go up and down completely randomly.
Pair Corralation between ICL Israel and Millennium Food
Assuming the 90 days trading horizon ICL Israel Chemicals is expected to generate 0.83 times more return on investment than Millennium Food. However, ICL Israel Chemicals is 1.21 times less risky than Millennium Food. It trades about 0.0 of its potential returns per unit of risk. Millennium Food Tech LP is currently generating about -0.09 per unit of risk. If you would invest 165,600 in ICL Israel Chemicals on August 30, 2024 and sell it today you would lose (1,600) from holding ICL Israel Chemicals or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICL Israel Chemicals vs. Millennium Food Tech LP
Performance |
| Timeline |
| ICL Israel Chemicals |
| Millennium Food Tech |
ICL Israel and Millennium Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Millennium Food
The main advantage of trading using opposite ICL Israel and Millennium Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Millennium Food 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 Millennium Food will offset losses from the drop in Millennium Food'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 |
| Millennium Food vs. Gilat Telecom Global | Millennium Food vs. Bio Meat Foodtech | Millennium Food vs. Clal Insurance Enterprises | Millennium Food vs. Hiron Trade Investments Industrial |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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