Correlation Between ICL Israel and Direct Capital
Can any of the company-specific risk be diversified away by investing in both ICL Israel and Direct Capital 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 Direct Capital 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 Direct Capital Investments, you can compare the effects of market volatilities on ICL Israel and Direct Capital 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 Direct Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICL Israel and Direct Capital.
Diversification Opportunities for ICL Israel and Direct Capital
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ICL and Direct is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Direct Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Capital Inves 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 Direct Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Capital Inves has no effect on the direction of ICL Israel i.e., ICL Israel and Direct Capital go up and down completely randomly.
Pair Corralation between ICL Israel and Direct Capital
Assuming the 90 days trading horizon ICL Israel Chemicals is expected to generate 0.56 times more return on investment than Direct Capital. However, ICL Israel Chemicals is 1.77 times less risky than Direct Capital. It trades about 0.08 of its potential returns per unit of risk. Direct Capital Investments is currently generating about -0.04 per unit of risk. If you would invest 213,000 in ICL Israel Chemicals on December 1, 2024 and sell it today you would earn a total of 6,000 from holding ICL Israel Chemicals or generate 2.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
ICL Israel Chemicals vs. Direct Capital Investments
Performance |
Timeline |
ICL Israel Chemicals |
Direct Capital Inves |
ICL Israel and Direct Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ICL Israel and Direct Capital
The main advantage of trading using opposite ICL Israel and Direct Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICL Israel position performs unexpectedly, Direct Capital 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 Direct Capital will offset losses from the drop in Direct Capital's long position.ICL Israel vs. Elbit Systems | ICL Israel vs. Bezeq Israeli Telecommunication | ICL Israel vs. Bank Hapoalim | ICL Israel vs. Teva Pharmaceutical Industries |
Direct Capital vs. Amot Investments | Direct Capital vs. Sure Tech Investments LP | Direct Capital vs. Tower Semiconductor | Direct Capital vs. Orbit Technologies |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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