Correlation Between United Internet and ITV PLC
Can any of the company-specific risk be diversified away by investing in both United Internet and ITV PLC 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 United Internet and ITV PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Internet AG and ITV PLC, you can compare the effects of market volatilities on United Internet and ITV PLC 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 United Internet with a short position of ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and ITV PLC.
Diversification Opportunities for United Internet and ITV PLC
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and ITV is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and ITV PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV PLC and United Internet 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 United Internet AG are associated (or correlated) with ITV PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITV PLC has no effect on the direction of United Internet i.e., United Internet and ITV PLC go up and down completely randomly.
Pair Corralation between United Internet and ITV PLC
Assuming the 90 days trading horizon United Internet is expected to generate 21.48 times less return on investment than ITV PLC. In addition to that, United Internet is 1.21 times more volatile than ITV PLC. It trades about 0.0 of its total potential returns per unit of risk. ITV PLC is currently generating about 0.02 per unit of volatility. If you would invest 6,499 in ITV PLC on September 15, 2024 and sell it today you would earn a total of 936.00 from holding ITV PLC or generate 14.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Internet AG vs. ITV PLC
Performance |
| Timeline |
| United Internet AG |
| ITV PLC |
United Internet and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and ITV PLC
The main advantage of trading using opposite United Internet and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, ITV PLC 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 ITV PLC will offset losses from the drop in ITV PLC's long position.| United Internet vs. Samsung Electronics Co | United Internet vs. Samsung Electronics Co | United Internet vs. Hyundai Motor | United Internet vs. Reliance Industries Ltd |
| ITV PLC vs. Charter Communications Cl | ITV PLC vs. Spirent Communications plc | ITV PLC vs. Cairo Communication SpA | ITV PLC vs. United Internet AG |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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