Correlation Between Nutrien and ICL Israel
Can any of the company-specific risk be diversified away by investing in both Nutrien and ICL Israel 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 Nutrien and ICL Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nutrien and ICL Israel Chemicals, you can compare the effects of market volatilities on Nutrien and ICL Israel 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 Nutrien with a short position of ICL Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutrien and ICL Israel.
Diversification Opportunities for Nutrien and ICL Israel
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nutrien and ICL is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nutrien and ICL Israel Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICL Israel Chemicals and Nutrien 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 Nutrien are associated (or correlated) with ICL Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICL Israel Chemicals has no effect on the direction of Nutrien i.e., Nutrien and ICL Israel go up and down completely randomly.
Pair Corralation between Nutrien and ICL Israel
Considering the 90-day investment horizon Nutrien is expected to generate 0.86 times more return on investment than ICL Israel. However, Nutrien is 1.16 times less risky than ICL Israel. It trades about -0.04 of its potential returns per unit of risk. ICL Israel Chemicals is currently generating about -0.03 per unit of risk. If you would invest 7,201 in Nutrien on August 27, 2024 and sell it today you would lose (2,508) from holding Nutrien or give up 34.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nutrien vs. ICL Israel Chemicals
Performance |
| Timeline |
| Nutrien |
| ICL Israel Chemicals |
Nutrien and ICL Israel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nutrien and ICL Israel
The main advantage of trading using opposite Nutrien and ICL Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nutrien position performs unexpectedly, ICL Israel 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 ICL Israel will offset losses from the drop in ICL Israel's long position.| Nutrien vs. CF Industries Holdings | Nutrien vs. Intrepid Potash | Nutrien vs. Corteva | Nutrien vs. ICL Israel Chemicals |
| ICL Israel vs. CF Industries Holdings | ICL Israel vs. The Mosaic | ICL Israel vs. American Vanguard | ICL Israel vs. CVR Partners LP |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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