Correlation Between KeyCorp and ICICI Bank
Can any of the company-specific risk be diversified away by investing in both KeyCorp and ICICI Bank 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 KeyCorp and ICICI Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and ICICI Bank Limited, you can compare the effects of market volatilities on KeyCorp and ICICI Bank 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 KeyCorp with a short position of ICICI Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and ICICI Bank.
Diversification Opportunities for KeyCorp and ICICI Bank
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KeyCorp and ICICI is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and ICICI Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICICI Bank Limited and KeyCorp 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 KeyCorp are associated (or correlated) with ICICI Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICICI Bank Limited has no effect on the direction of KeyCorp i.e., KeyCorp and ICICI Bank go up and down completely randomly.
Pair Corralation between KeyCorp and ICICI Bank
Assuming the 90 days trading horizon KeyCorp is expected to generate 0.97 times more return on investment than ICICI Bank. However, KeyCorp is 1.03 times less risky than ICICI Bank. It trades about 0.25 of its potential returns per unit of risk. ICICI Bank Limited is currently generating about -0.33 per unit of risk. If you would invest 2,381 in KeyCorp on October 20, 2024 and sell it today you would earn a total of 113.00 from holding KeyCorp or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. ICICI Bank Limited
Performance |
| Timeline |
| KeyCorp |
| ICICI Bank Limited |
KeyCorp and ICICI Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and ICICI Bank
The main advantage of trading using opposite KeyCorp and ICICI Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp position performs unexpectedly, ICICI Bank 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 ICICI Bank will offset losses from the drop in ICICI Bank's long position.The idea behind KeyCorp and ICICI Bank Limited 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.| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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