Correlation Between Informa PLC and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Informa PLC and XLMedia 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 Informa PLC and XLMedia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Informa PLC ADR and XLMedia PLC, you can compare the effects of market volatilities on Informa PLC and XLMedia 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 Informa PLC with a short position of XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Informa PLC and XLMedia PLC.
Diversification Opportunities for Informa PLC and XLMedia PLC
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Informa and XLMedia is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Informa PLC ADR and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and Informa PLC 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 Informa PLC ADR are associated (or correlated) with XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Informa PLC i.e., Informa PLC and XLMedia PLC go up and down completely randomly.
Pair Corralation between Informa PLC and XLMedia PLC
Assuming the 90 days horizon Informa PLC is expected to generate 42.41 times less return on investment than XLMedia PLC. But when comparing it to its historical volatility, Informa PLC ADR is 1.88 times less risky than XLMedia PLC. It trades about 0.01 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 15.00 in XLMedia PLC on August 30, 2024 and sell it today you would earn a total of 2.00 from holding XLMedia PLC or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Informa PLC ADR vs. XLMedia PLC
Performance |
| Timeline |
| Informa PLC ADR |
| XLMedia PLC |
Informa PLC and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Informa PLC and XLMedia PLC
The main advantage of trading using opposite Informa PLC and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Informa PLC position performs unexpectedly, XLMedia 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Informa PLC vs. Legible | Informa PLC vs. FP Newspapers | Informa PLC vs. RCS MediaGroup SpA | Informa PLC vs. Scholastic |
| XLMedia PLC vs. FP Newspapers | XLMedia PLC vs. RCS MediaGroup SpA | XLMedia PLC vs. Scholastic | XLMedia PLC vs. Lee Enterprises Incorporated |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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