Correlation Between Alliance Data and ITV PLC
Can any of the company-specific risk be diversified away by investing in both Alliance Data 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 Alliance Data and ITV PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Data Systems and ITV PLC, you can compare the effects of market volatilities on Alliance Data 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 Alliance Data with a short position of ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and ITV PLC.
Diversification Opportunities for Alliance Data and ITV PLC
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alliance and ITV is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and ITV PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV PLC and Alliance Data 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 Alliance Data Systems 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 Alliance Data i.e., Alliance Data and ITV PLC go up and down completely randomly.
Pair Corralation between Alliance Data and ITV PLC
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 1.18 times more return on investment than ITV PLC. However, Alliance Data is 1.18 times more volatile than ITV PLC. It trades about 0.2 of its potential returns per unit of risk. ITV PLC is currently generating about 0.0 per unit of risk. If you would invest 5,008 in Alliance Data Systems on September 1, 2024 and sell it today you would earn a total of 892.00 from holding Alliance Data Systems or generate 17.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Alliance Data Systems vs. ITV PLC
Performance |
| Timeline |
| Alliance Data Systems |
| ITV PLC |
Alliance Data and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and ITV PLC
The main advantage of trading using opposite Alliance Data and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data 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.| Alliance Data vs. Infrastrutture Wireless Italiane | Alliance Data vs. Monster Beverage Corp | Alliance Data vs. Molson Coors Beverage | Alliance Data vs. Take Two Interactive Software |
| ITV PLC vs. Premier Foods PLC | ITV PLC vs. AIM ImmunoTech | ITV PLC vs. Grieg Seafood | ITV PLC vs. Schweiter Technologies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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