Correlation Between El Mor and ICL Israel
Can any of the company-specific risk be diversified away by investing in both El Mor 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 El Mor and ICL Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Mor Electric Installation and ICL Israel Chemicals, you can compare the effects of market volatilities on El Mor 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 El Mor with a short position of ICL Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Mor and ICL Israel.
Diversification Opportunities for El Mor and ICL Israel
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ELMR and ICL is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding El Mor Electric Installation 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 El Mor 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 El Mor Electric Installation 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 El Mor i.e., El Mor and ICL Israel go up and down completely randomly.
Pair Corralation between El Mor and ICL Israel
Assuming the 90 days trading horizon El Mor Electric Installation is expected to generate 0.89 times more return on investment than ICL Israel. However, El Mor Electric Installation is 1.13 times less risky than ICL Israel. It trades about -0.09 of its potential returns per unit of risk. ICL Israel Chemicals is currently generating about -0.27 per unit of risk. If you would invest 106,670 in El Mor Electric Installation on January 25, 2024 and sell it today you would lose (2,970) from holding El Mor Electric Installation or give up 2.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Mor Electric Installation vs. ICL Israel Chemicals
Performance |
| Timeline |
| El Mor Electric |
| ICL Israel Chemicals |
El Mor and ICL Israel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Mor and ICL Israel
The main advantage of trading using opposite El Mor and ICL Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Mor 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.| El Mor vs. Alony Hetz Properties | El Mor vs. Melisron | El Mor vs. Shufersal | El Mor vs. Israel Discount Bank |
| ICL Israel vs. Neto ME Holdings | ICL Israel vs. Aryt Industries | ICL Israel vs. Kerur Holdings | ICL Israel vs. Globrands Group |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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