Correlation Between Gray Television and ITV PLC
Can any of the company-specific risk be diversified away by investing in both Gray Television 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 Gray Television and ITV PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gray Television and ITV PLC ADR, you can compare the effects of market volatilities on Gray Television 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 Gray Television with a short position of ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gray Television and ITV PLC.
Diversification Opportunities for Gray Television and ITV PLC
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gray and ITV is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Gray Television 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 Gray Television 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 Gray Television 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 Gray Television i.e., Gray Television and ITV PLC go up and down completely randomly.
Pair Corralation between Gray Television and ITV PLC
Considering the 90-day investment horizon Gray Television is expected to under-perform the ITV PLC. In addition to that, Gray Television is 1.9 times more volatile than ITV PLC ADR. It trades about -0.03 of its total potential returns per unit of risk. ITV PLC ADR is currently generating about 0.01 per unit of volatility. If you would invest 784.00 in ITV PLC ADR on August 24, 2024 and sell it today you would lose (8.00) from holding ITV PLC ADR or give up 1.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gray Television vs. ITV PLC ADR
Performance |
| Timeline |
| Gray Television |
| ITV PLC ADR |
Gray Television and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gray Television and ITV PLC
The main advantage of trading using opposite Gray Television and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gray Television 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.| Gray Television vs. E W Scripps | Gray Television vs. Saga Communications | Gray Television vs. iHeartMedia Class A | Gray Television vs. Cumulus Media Class |
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 Stocks Directory module to find actively traded stocks across global markets.
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