Correlation Between Danel and ICL Israel
Can any of the company-specific risk be diversified away by investing in both Danel 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 Danel and ICL Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danel and ICL Israel Chemicals, you can compare the effects of market volatilities on Danel 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 Danel with a short position of ICL Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danel and ICL Israel.
Diversification Opportunities for Danel and ICL Israel
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Danel and ICL is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Danel 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 Danel 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 Danel 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 Danel i.e., Danel and ICL Israel go up and down completely randomly.
Pair Corralation between Danel and ICL Israel
Assuming the 90 days trading horizon Danel is expected to generate 0.82 times more return on investment than ICL Israel. However, Danel is 1.22 times less risky than ICL Israel. It trades about 0.06 of its potential returns per unit of risk. ICL Israel Chemicals is currently generating about -0.04 per unit of risk. If you would invest 3,580,202 in Danel on September 3, 2024 and sell it today you would earn a total of 443,798 from holding Danel or generate 12.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Danel vs. ICL Israel Chemicals
Performance |
Timeline |
Danel |
ICL Israel Chemicals |
Danel and ICL Israel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Danel and ICL Israel
The main advantage of trading using opposite Danel and ICL Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danel 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.Danel vs. Hilan | Danel vs. Fattal 1998 Holdings | Danel vs. Matrix | Danel vs. Bezeq Israeli Telecommunication |
ICL Israel vs. Elbit Systems | ICL Israel vs. Bezeq Israeli Telecommunication | ICL Israel vs. Bank Hapoalim | ICL Israel vs. Teva Pharmaceutical Industries |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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