Correlation Between Darden Restaurants and ICL Israel

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Darden Restaurants 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 Darden Restaurants and ICL Israel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darden Restaurants and ICL Israel Chemicals, you can compare the effects of market volatilities on Darden Restaurants 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 Darden Restaurants with a short position of ICL Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darden Restaurants and ICL Israel.

Diversification Opportunities for Darden Restaurants and ICL Israel

0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Darden and ICL is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants 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 Darden Restaurants 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 Darden Restaurants 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 Darden Restaurants i.e., Darden Restaurants and ICL Israel go up and down completely randomly.

Pair Corralation between Darden Restaurants and ICL Israel

Considering the 90-day investment horizon Darden Restaurants is expected to under-perform the ICL Israel. But the stock apears to be less risky and, when comparing its historical volatility, Darden Restaurants is 1.41 times less risky than ICL Israel. The stock trades about -0.03 of its potential returns per unit of risk. The ICL Israel Chemicals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  507.00  in ICL Israel Chemicals on December 29, 2023 and sell it today you would earn a total of  29.00  from holding ICL Israel Chemicals or generate 5.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Darden Restaurants  vs.  ICL Israel Chemicals

 Performance 
       Timeline  
Darden Restaurants 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Darden Restaurants is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
ICL Israel Chemicals 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in ICL Israel Chemicals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental indicators, ICL Israel may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Darden Restaurants and ICL Israel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Darden Restaurants and ICL Israel

The main advantage of trading using opposite Darden Restaurants and ICL Israel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darden Restaurants 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.
The idea behind Darden Restaurants and ICL Israel Chemicals 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

Other Complementary Tools

Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum