Correlation Between ICL Israel and Scotts Miracle
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Scotts Miracle 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 Scotts Miracle 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 Scotts Miracle Gro, you can compare the effects of market volatilities on ICL Israel and Scotts Miracle 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 Scotts Miracle. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Scotts Miracle.
Diversification Opportunities for ICL Israel and Scotts Miracle
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between ICL and Scotts is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Scotts Miracle Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scotts Miracle Gro 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 Scotts Miracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scotts Miracle Gro has no effect on the direction of ICL Israel i.e., ICL Israel and Scotts Miracle go up and down completely randomly.
Pair Corralation between ICL Israel and Scotts Miracle
Considering the 90-day investment horizon ICL Israel is expected to generate 17.86 times less return on investment than Scotts Miracle. But when comparing it to its historical volatility, ICL Israel Chemicals is 1.32 times less risky than Scotts Miracle. It trades about 0.0 of its potential returns per unit of risk. Scotts Miracle Gro is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6,407 in Scotts Miracle Gro on August 24, 2024 and sell it today you would earn a total of 1,241 from holding Scotts Miracle Gro or generate 19.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICL Israel Chemicals vs. Scotts Miracle Gro
Performance |
| Timeline |
| ICL Israel Chemicals |
| Scotts Miracle Gro |
ICL Israel and Scotts Miracle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICL Israel and Scotts Miracle
The main advantage of trading using opposite ICL Israel and Scotts Miracle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Scotts Miracle 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 Scotts Miracle will offset losses from the drop in Scotts Miracle's long position.| ICL Israel vs. CF Industries Holdings | ICL Israel vs. The Mosaic | ICL Israel vs. American Vanguard | ICL Israel vs. CVR Partners LP |
| Scotts Miracle vs. Corteva | Scotts Miracle vs. CF Industries Holdings | Scotts Miracle vs. American Vanguard | Scotts Miracle vs. Intrepid Potash |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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