Correlation Between Israel and Akzo Nobel

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

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

Diversification Opportunities for Israel and Akzo Nobel

0.05

Correlation Coefficient

Israel  Akzo Nobel

Significant diversification

The 3 months correlation between Israel and Akzo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Israel and Akzo Nobel NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akzo Nobel NV and 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 Israel are associated (or correlated) with Akzo Nobel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akzo Nobel NV has no effect on the direction of Israel i.e., Israel and Akzo Nobel go up and down completely randomly.

Pair Corralation between Israel and Akzo Nobel

If you would invest  6,402  in Akzo Nobel NV on December 1, 2024 and sell it today you would lose (12.00) from holding Akzo Nobel NV or give up 0.19% of portfolio value over 90 days.

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

Israel  vs.  Akzo Nobel NV

Israel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Israel are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, Israel reported solid returns over the last few months and may actually be approaching a breakup point.

Akzo Nobel NV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Akzo Nobel NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Akzo Nobel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Israel and Akzo Nobel

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

The idea behind Israel and Akzo Nobel NV 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.