Correlation Between ICL Israel and Millennium Food

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

Diversification Opportunities for ICL Israel and Millennium Food

-0.42

Correlation Coefficient

ICL Israel  Millennium Food

Very good diversification

The 3 months correlation between ICL and Millennium is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ICL Israel Chemicals and Millennium Food Tech LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millennium Food Tech 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 Millennium Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millennium Food Tech has no effect on the direction of ICL Israel i.e., ICL Israel and Millennium Food go up and down completely randomly.

Pair Corralation between ICL Israel and Millennium Food

Assuming the 90 days trading horizon ICL Israel is expected to generate 1.92 times less return on investment than Millennium Food. But when comparing it to its historical volatility, ICL Israel Chemicals is 1.95 times less risky than Millennium Food. It trades about 0.17 of its potential returns per unit of risk. Millennium Food Tech LP is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  18,020  in Millennium Food Tech LP on September 28, 2024 and sell it today you would earn a total of  2,200  from holding Millennium Food Tech LP or generate 12.21% return on investment over 90 days.

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

ICL Israel Chemicals  vs.  Millennium Food Tech LP

ICL Israel Chemicals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ICL Israel Chemicals are ranked lower than 8 (%) 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.

Millennium Food Tech

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Millennium Food Tech LP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Millennium Food may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ICL Israel and Millennium Food

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

The idea behind ICL Israel Chemicals and Millennium Food Tech LP 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.