Correlation Between ICICI Bank and Mizuho Financial

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

Diversification Opportunities for ICICI Bank and Mizuho Financial

0.7

Correlation Coefficient

ICICI Bank  Mizuho Financial

Poor diversification

The 3 months correlation between ICICI and Mizuho is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Bank Limited and Mizuho Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizuho Financial 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 Mizuho Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mizuho Financial has no effect on the direction of ICICI Bank i.e., ICICI Bank and Mizuho Financial go up and down completely randomly.

Pair Corralation between ICICI Bank and Mizuho Financial

Assuming the 90 days trading horizon ICICI Bank is expected to generate 1.47 times less return on investment than Mizuho Financial. But when comparing it to its historical volatility, ICICI Bank Limited is 1.29 times less risky than Mizuho Financial. It trades about 0.07 of its potential returns per unit of risk. Mizuho Financial Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,620  in Mizuho Financial Group on October 10, 2024 and sell it today you would earn a total of  783.00  from holding Mizuho Financial Group or generate 48.33% return on investment over 90 days.

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

ICICI Bank Limited  vs.  Mizuho Financial Group

ICICI Bank Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICICI Bank Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, ICICI Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Mizuho Financial

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mizuho Financial Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Mizuho Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICICI Bank and Mizuho Financial

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

The idea behind ICICI Bank Limited and Mizuho Financial Group 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.