Correlation Between Cumulus Media and ITV PLC
Can any of the company-specific risk be diversified away by investing in both Cumulus Media 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 Cumulus Media and ITV PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumulus Media Class and ITV PLC ADR, you can compare the effects of market volatilities on Cumulus Media 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 Cumulus Media with a short position of ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumulus Media and ITV PLC.
Diversification Opportunities for Cumulus Media and ITV PLC
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cumulus and ITV is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class and ITV PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV PLC ADR and Cumulus Media 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 Cumulus Media Class 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 ADR has no effect on the direction of Cumulus Media i.e., Cumulus Media and ITV PLC go up and down completely randomly.
Pair Corralation between Cumulus Media and ITV PLC
Given the investment horizon of 90 days Cumulus Media Class is expected to under-perform the ITV PLC. In addition to that, Cumulus Media is 1.99 times more volatile than ITV PLC ADR. It trades about -0.29 of its total potential returns per unit of risk. ITV PLC ADR is currently generating about -0.24 per unit of volatility. If you would invest 1,077 in ITV PLC ADR on August 28, 2024 and sell it today you would lose (256.00) from holding ITV PLC ADR or give up 23.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Cumulus Media Class vs. ITV PLC ADR
Performance |
| Timeline |
| Cumulus Media Class |
| ITV PLC ADR |
Cumulus Media and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumulus Media and ITV PLC
The main advantage of trading using opposite Cumulus Media and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media 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.| Cumulus Media vs. Walt Disney | Cumulus Media vs. Roku Inc | Cumulus Media vs. Netflix | Cumulus Media vs. AMC Entertainment Holdings |
| ITV PLC vs. ProSiebenSat1 Media AG | ITV PLC vs. RTL Group SA | ITV PLC vs. iHeartMedia | ITV PLC vs. TV Azteca SAB |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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