Correlation Between ICL Israel and Retailors

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

Diversification Opportunities for ICL Israel and Retailors

-0.28

Correlation Coefficient

ICL Israel  Retailors

Very good diversification

The 3 months correlation between ICL and Retailors is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Retailors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retailors 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 Retailors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retailors has no effect on the direction of ICL Israel i.e., ICL Israel and Retailors go up and down completely randomly.

Pair Corralation between ICL Israel and Retailors

Assuming the 90 days trading horizon ICL Israel Chemicals is expected to generate 0.42 times more return on investment than Retailors. However, ICL Israel Chemicals is 2.4 times less risky than Retailors. It trades about -0.02 of its potential returns per unit of risk. Retailors is currently generating about -0.02 per unit of risk. If you would invest  239,966  in ICL Israel Chemicals on April 25, 2025 and sell it today you would lose (5,366) from holding ICL Israel Chemicals or give up 2.24% of portfolio value over 90 days.

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

ICL Israel Chemicals  vs.  Retailors

ICL Israel Chemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICL Israel Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, ICL Israel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Retailors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Retailors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Retailors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ICL Israel and Retailors

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

The idea behind ICL Israel Chemicals and Retailors 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.