Correlation Between ICL Israel and E I

Can any of the company-specific risk be diversified away by investing in both ICL Israel and E I 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 E I 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 E I du, you can compare the effects of market volatilities on ICL Israel and E I 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 E I. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and E I.

Diversification Opportunities for ICL Israel and E I

-0.05

Correlation Coefficient

ICL Israel  E I

Good diversification

The 3 months correlation between ICL and CTA-PB is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and E I du in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E I du 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 E I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E I du has no effect on the direction of ICL Israel i.e., ICL Israel and E I go up and down completely randomly.

Pair Corralation between ICL Israel and E I

Considering the 90-day investment horizon ICL Israel Chemicals is expected to under-perform the E I. In addition to that, ICL Israel is 1.98 times more volatile than E I du. It trades about -0.05 of its total potential returns per unit of risk. E I du is currently generating about 0.08 per unit of volatility. If you would invest  6,582  in E I du on June 20, 2024 and sell it today you would earn a total of  1,208  from holding E I du or generate 18.35% 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.  E I du

ICL Israel Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICL Israel Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

E I du

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E I du are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, E I may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with ICL Israel and E I

The main advantage of trading using opposite ICL Israel and E I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, E I 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 E I will offset losses from the drop in E I's long position.

The idea behind ICL Israel Chemicals and E I du pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.