Correlation Between Herald Investment and ITV PLC
Can any of the company-specific risk be diversified away by investing in both Herald Investment 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 Herald Investment and ITV PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and ITV PLC, you can compare the effects of market volatilities on Herald Investment 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 Herald Investment with a short position of ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and ITV PLC.
Diversification Opportunities for Herald Investment and ITV PLC
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Herald and ITV is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and ITV PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV PLC and Herald Investment 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 Herald Investment Trust 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 Herald Investment i.e., Herald Investment and ITV PLC go up and down completely randomly.
Pair Corralation between Herald Investment and ITV PLC
Assuming the 90 days trading horizon Herald Investment is expected to generate 1.34 times less return on investment than ITV PLC. But when comparing it to its historical volatility, Herald Investment Trust is 2.93 times less risky than ITV PLC. It trades about 0.6 of its potential returns per unit of risk. ITV PLC is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 6,345 in ITV PLC on September 12, 2024 and sell it today you would earn a total of 995.00 from holding ITV PLC or generate 15.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herald Investment Trust vs. ITV PLC
Performance |
| Timeline |
| Herald Investment Trust |
| ITV PLC |
Herald Investment and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and ITV PLC
The main advantage of trading using opposite Herald Investment and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment 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.| Herald Investment vs. Samsung Electronics Co | Herald Investment vs. Samsung Electronics Co | Herald Investment vs. Hyundai Motor | Herald Investment vs. Toyota Motor Corp |
| ITV PLC vs. Associated British Foods | ITV PLC vs. Ecclesiastical Insurance Office | ITV PLC vs. Fevertree Drinks Plc | ITV PLC vs. Monster Beverage Corp |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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