Correlation Between Icici Bank and BankUnited

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Can any of the company-specific risk be diversified away by investing in both Icici Bank and BankUnited 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 BankUnited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icici Bank and BankUnited, you can compare the effects of market volatilities on Icici Bank and BankUnited 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 BankUnited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icici Bank and BankUnited.

Diversification Opportunities for Icici Bank and BankUnited

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Icici and BankUnited is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Icici Bank Ltd and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited 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 are associated (or correlated) with BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of Icici Bank i.e., Icici Bank and BankUnited go up and down completely randomly.

Pair Corralation between Icici Bank and BankUnited

Considering the 90-day investment horizon Icici Bank is expected to generate 0.91 times more return on investment than BankUnited. However, Icici Bank is 1.1 times less risky than BankUnited. It trades about -0.05 of its potential returns per unit of risk. BankUnited is currently generating about -0.18 per unit of risk. If you would invest  2,147  in Icici Bank on June 29, 2022 and sell it today you would lose (41.00)  from holding Icici Bank or give up 1.91% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.24%
ValuesDaily Returns

Icici Bank Ltd  vs.  BankUnited

 Performance (%) 
       Timeline  
Icici Bank 
Icici Performance
14 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Icici Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, Icici Bank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Icici Price Channel

BankUnited 
BankUnited Performance
0 of 100
Over the last 90 days BankUnited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, BankUnited is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

BankUnited Price Channel

Icici Bank and BankUnited Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Icici Bank and BankUnited

The main advantage of trading using opposite Icici Bank and BankUnited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icici Bank position performs unexpectedly, BankUnited 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 BankUnited will offset losses from the drop in BankUnited's long position.
Icici Bank vs. Kibush Capital Corp
The idea behind Icici Bank and BankUnited 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.
BankUnited vs. Kibush Capital Corp
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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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