Correlation Between ICL Israel and Mosaic

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

Diversification Opportunities for ICL Israel and Mosaic

-0.04

Correlation Coefficient

ICL Israel  Mosaic

Good diversification

The 3 months correlation between ICL and Mosaic is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic 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 Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of ICL Israel i.e., ICL Israel and Mosaic go up and down completely randomly.

Pair Corralation between ICL Israel and Mosaic

Considering the 90-day investment horizon ICL Israel Chemicals is expected to generate 1.05 times more return on investment than Mosaic. However, ICL Israel is 1.05 times more volatile than The Mosaic. It trades about 0.05 of its potential returns per unit of risk. The Mosaic is currently generating about -0.05 per unit of risk. If you would invest  428.00  in ICL Israel Chemicals on September 22, 2024 and sell it today you would earn a total of  57.00  from holding ICL Israel Chemicals or generate 13.32% 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.  The Mosaic

ICL Israel Chemicals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ICL Israel Chemicals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental indicators, ICL Israel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Mosaic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Mosaic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mosaic is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ICL Israel and Mosaic

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

The idea behind ICL Israel Chemicals and The Mosaic 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.