Correlation Between Dow Jones and ITV PLC
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and ITV PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and ITV PLC ADR, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ITV PLC.
Diversification Opportunities for Dow Jones and ITV PLC
Pay attention - limited upside
The 3 months correlation between Dow and ITV is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and ITV PLC go up and down completely randomly.
Pair Corralation between Dow Jones and ITV PLC
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.33 times more return on investment than ITV PLC. However, Dow Jones Industrial is 3.0 times less risky than ITV PLC. It trades about 0.13 of its potential returns per unit of risk. ITV PLC ADR is currently generating about 0.03 per unit of risk. If you would invest 3,541,698 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 845,337 from holding Dow Jones Industrial or generate 23.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. ITV PLC ADR
Performance |
| Timeline |
Dow Jones and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ITV PLC ADR
Pair trading matchups for ITV PLC
Pair Trading with Dow Jones and ITV PLC
The main advantage of trading using opposite Dow Jones and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |