Correlation Between ICICI Bank and KeyCorp
Can any of the company-specific risk be diversified away by investing in both ICICI Bank and KeyCorp 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 KeyCorp 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 KeyCorp, you can compare the effects of market volatilities on ICICI Bank and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICICI Bank and KeyCorp.
Diversification Opportunities for ICICI Bank and KeyCorp
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ICICI and KeyCorp is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of ICICI Bank i.e., ICICI Bank and KeyCorp go up and down completely randomly.
Pair Corralation between ICICI Bank and KeyCorp
Considering the 90-day investment horizon ICICI Bank Limited is expected to under-perform the KeyCorp. But the stock apears to be less risky and, when comparing its historical volatility, ICICI Bank Limited is 1.63 times less risky than KeyCorp. The stock trades about -0.33 of its potential returns per unit of risk. The KeyCorp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,123 in KeyCorp on October 20, 2024 and sell it today you would earn a total of 73.00 from holding KeyCorp or generate 3.44% 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. KeyCorp
Performance |
| Timeline |
| ICICI Bank Limited |
| KeyCorp |
ICICI Bank and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICICI Bank and KeyCorp
The main advantage of trading using opposite ICICI Bank and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICICI Bank position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| ICICI Bank vs. US Bancorp | ICICI Bank vs. US Bancorp | ICICI Bank vs. KB Financial Group | ICICI Bank vs. Itau Unibanco Banco |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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