Correlation Between ITV Plc and Air Liquide
Can any of the company-specific risk be diversified away by investing in both ITV Plc and Air Liquide 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 ITV Plc and Air Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITV plc and Air Liquide SA, you can compare the effects of market volatilities on ITV Plc and Air Liquide 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 ITV Plc with a short position of Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITV Plc and Air Liquide.
Diversification Opportunities for ITV Plc and Air Liquide
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ITV and Air is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ITV plc and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA and ITV 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 ITV plc are associated (or correlated) with Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of ITV Plc i.e., ITV Plc and Air Liquide go up and down completely randomly.
Pair Corralation between ITV Plc and Air Liquide
Assuming the 90 days horizon ITV plc is expected to under-perform the Air Liquide. In addition to that, ITV Plc is 2.11 times more volatile than Air Liquide SA. It trades about -0.29 of its total potential returns per unit of risk. Air Liquide SA is currently generating about -0.21 per unit of volatility. If you would invest 16,800 in Air Liquide SA on August 25, 2024 and sell it today you would lose (1,044) from holding Air Liquide SA or give up 6.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITV plc vs. Air Liquide SA
Performance |
| Timeline |
| ITV plc |
| Air Liquide SA |
ITV Plc and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITV Plc and Air Liquide
The main advantage of trading using opposite ITV Plc and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITV Plc position performs unexpectedly, Air Liquide 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 Air Liquide will offset losses from the drop in Air Liquide's long position.| ITV Plc vs. American Eagle Outfitters | ITV Plc vs. Strategic Education | ITV Plc vs. STRAYER EDUCATION | ITV Plc vs. Coeur Mining |
| Air Liquide vs. Corporate Travel Management | Air Liquide vs. CeoTronics AG | Air Liquide vs. Cleanaway Waste Management | Air Liquide vs. Playa Hotels Resorts |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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