Correlation Between Creative Media and ICL Israel

Can any of the company-specific risk be diversified away by investing in both Creative Media 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 Creative Media and ICL Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Creative Media Community and ICL Israel Chemicals, you can compare the effects of market volatilities on Creative Media 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 Creative Media with a short position of ICL Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creative Media and ICL Israel.

Diversification Opportunities for Creative Media and ICL Israel

0.06

Correlation Coefficient

Creative Media  ICL Israel

Significant diversification

The 3 months correlation between Creative and ICL is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Creative Media Community 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 Creative Media 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 Creative Media Community 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 Creative Media i.e., Creative Media and ICL Israel go up and down completely randomly.

Pair Corralation between Creative Media and ICL Israel

Assuming the 90 days trading horizon Creative Media Community is expected to generate 58.98 times more return on investment than ICL Israel. However, Creative Media is 58.98 times more volatile than ICL Israel Chemicals. It trades about 0.12 of its potential returns per unit of risk. ICL Israel Chemicals is currently generating about 0.2 per unit of risk. If you would invest  6,170  in Creative Media Community on December 30, 2024 and sell it today you would earn a total of  1,880  from holding Creative Media Community or generate 30.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Creative Media Community  vs.  ICL Israel Chemicals

Creative Media Community

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Creative Media Community are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Creative Media sustained solid returns over the last few months and may actually be approaching a breakup point.

ICL Israel Chemicals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ICL Israel Chemicals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, ICL Israel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Creative Media and ICL Israel

The main advantage of trading using opposite Creative Media and ICL Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Creative Media 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.

The idea behind Creative Media Community and ICL Israel Chemicals 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..