Correlation Between Thyssenkrupp and ITV PLC
Can any of the company-specific risk be diversified away by investing in both Thyssenkrupp 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 Thyssenkrupp and ITV PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thyssenkrupp AG ON and ITV PLC, you can compare the effects of market volatilities on Thyssenkrupp 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 Thyssenkrupp with a short position of ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thyssenkrupp and ITV PLC.
Diversification Opportunities for Thyssenkrupp and ITV PLC
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Thyssenkrupp and ITV is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Thyssenkrupp AG ON and ITV PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV PLC and Thyssenkrupp 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 Thyssenkrupp AG ON 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 Thyssenkrupp i.e., Thyssenkrupp and ITV PLC go up and down completely randomly.
Pair Corralation between Thyssenkrupp and ITV PLC
Assuming the 90 days trading horizon Thyssenkrupp AG ON is expected to under-perform the ITV PLC. In addition to that, Thyssenkrupp is 1.3 times more volatile than ITV PLC. It trades about -0.02 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 6,700 in ITV PLC on September 3, 2024 and sell it today you would earn a total of 565.00 from holding ITV PLC or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thyssenkrupp AG ON vs. ITV PLC
Performance |
| Timeline |
| Thyssenkrupp AG ON |
| ITV PLC |
Thyssenkrupp and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thyssenkrupp and ITV PLC
The main advantage of trading using opposite Thyssenkrupp and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thyssenkrupp 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.| Thyssenkrupp vs. Orient Telecoms | Thyssenkrupp vs. Zegona Communications Plc | Thyssenkrupp vs. Aeorema Communications Plc | Thyssenkrupp vs. Arrow Electronics |
| ITV PLC vs. Spirent Communications plc | ITV PLC vs. Aeorema Communications Plc | ITV PLC vs. Litigation Capital Management | ITV PLC vs. Zoom Video Communications |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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