Correlation Between ICICI Bank and United Airlines
Can any of the company-specific risk be diversified away by investing in both ICICI Bank and United Airlines 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 ICICI Bank and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICICI Bank Limited and United Airlines Holdings, you can compare the effects of market volatilities on ICICI Bank and United Airlines 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 ICICI Bank with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICICI Bank and United Airlines.
Diversification Opportunities for ICICI Bank and United Airlines
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ICICI and United is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings and ICICI Bank 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 ICICI Bank Limited are associated (or correlated) with United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of ICICI Bank i.e., ICICI Bank and United Airlines go up and down completely randomly.
Pair Corralation between ICICI Bank and United Airlines
Assuming the 90 days trading horizon ICICI Bank Limited is expected to under-perform the United Airlines. But the stock apears to be less risky and, when comparing its historical volatility, ICICI Bank Limited is 1.54 times less risky than United Airlines. The stock trades about -0.46 of its potential returns per unit of risk. The United Airlines Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 30,225 in United Airlines Holdings on October 31, 2024 and sell it today you would earn a total of 1,069 from holding United Airlines Holdings or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICICI Bank Limited vs. United Airlines Holdings
Performance |
| Timeline |
| ICICI Bank Limited |
| United Airlines Holdings |
ICICI Bank and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICICI Bank and United Airlines
The main advantage of trading using opposite ICICI Bank and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICICI Bank position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| ICICI Bank vs. Taiwan Semiconductor Manufacturing | ICICI Bank vs. Apple Inc | ICICI Bank vs. Alibaba Group Holding | ICICI Bank vs. Microsoft |
| United Airlines vs. STAG Industrial, | United Airlines vs. Westinghouse Air Brake | United Airlines vs. Fidelity National Information | United Airlines vs. Broadridge Financial Solutions, |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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