Correlation Between Ford and ICICI Bank

Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and ICICI Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ford Motor and ICICI Bank Limited, you can compare the effects of market volatilities on Ford 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 Ford with a short position of ICICI Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ICICI Bank.

Diversification Opportunities for Ford and ICICI Bank

-0.05

Correlation Coefficient

Ford  ICICI Bank

Good diversification

The 3 months correlation between Ford and ICICI is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and ICICI Bank go up and down completely randomly.

Pair Corralation between Ford and ICICI Bank

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.57 times more return on investment than ICICI Bank. However, Ford is 1.57 times more volatile than ICICI Bank Limited. It trades about 0.06 of its potential returns per unit of risk. ICICI Bank Limited is currently generating about -0.21 per unit of risk. If you would invest  957.00  in Ford Motor on December 20, 2024 and sell it today you would earn a total of  60.00  from holding Ford Motor or generate 6.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Ford Motor  vs.  ICICI Bank Limited

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ICICI Bank Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICICI Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ford and ICICI Bank

The main advantage of trading using opposite Ford and ICICI Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..