Correlation Between ICICI Bank and Monster Beverage

Can any of the company-specific risk be diversified away by investing in both ICICI Bank and Monster Beverage 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 Monster Beverage 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 Monster Beverage, you can compare the effects of market volatilities on ICICI Bank and Monster Beverage 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 Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICICI Bank and Monster Beverage.

Diversification Opportunities for ICICI Bank and Monster Beverage

0.69

Correlation Coefficient

ICICI Bank  Monster Beverage

Poor diversification

The 3 months correlation between ICICI and Monster is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and Monster Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage 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 Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage has no effect on the direction of ICICI Bank i.e., ICICI Bank and Monster Beverage go up and down completely randomly.

Pair Corralation between ICICI Bank and Monster Beverage

Assuming the 90 days trading horizon ICICI Bank Limited is expected to under-perform the Monster Beverage. In addition to that, ICICI Bank is 1.33 times more volatile than Monster Beverage. It trades about -0.41 of its total potential returns per unit of risk. Monster Beverage is currently generating about -0.34 per unit of volatility. If you would invest  4,004  in Monster Beverage on October 22, 2024 and sell it today you would lose (264.00) from holding Monster Beverage or give up 6.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ICICI Bank Limited  vs.  Monster Beverage

ICICI Bank Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ICICI Bank Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, ICICI Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Monster Beverage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monster Beverage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Monster Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ICICI Bank and Monster Beverage

The main advantage of trading using opposite ICICI Bank and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICICI Bank position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage's long position.

The idea behind ICICI Bank Limited and Monster Beverage 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.