Correlation Between ICL Israel and Matricelf

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

Diversification Opportunities for ICL Israel and Matricelf

-0.73

Correlation Coefficient

ICL Israel  Matricelf

Pay attention - limited upside

The 3 months correlation between ICL and Matricelf is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Matricelf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matricelf 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 Matricelf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matricelf has no effect on the direction of ICL Israel i.e., ICL Israel and Matricelf go up and down completely randomly.

Pair Corralation between ICL Israel and Matricelf

Assuming the 90 days trading horizon ICL Israel Chemicals is expected to under-perform the Matricelf. But the stock apears to be less risky and, when comparing its historical volatility, ICL Israel Chemicals is 1.06 times less risky than Matricelf. The stock trades about -0.08 of its potential returns per unit of risk. The Matricelf is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  35,680  in Matricelf on November 19, 2024 and sell it today you would lose (80.00) from holding Matricelf or give up 0.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

ICL Israel Chemicals  vs.  Matricelf

ICL Israel Chemicals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ICL Israel Chemicals are ranked lower than 17 (%) 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.

Matricelf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matricelf has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ICL Israel and Matricelf

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

The idea behind ICL Israel Chemicals and Matricelf 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.