Correlation Between ITV Plc and Carrefour
Can any of the company-specific risk be diversified away by investing in both ITV Plc and Carrefour 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 Carrefour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITV plc and Carrefour SA, you can compare the effects of market volatilities on ITV Plc and Carrefour 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 Carrefour. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITV Plc and Carrefour.
Diversification Opportunities for ITV Plc and Carrefour
Modest diversification
The 3 months correlation between ITV and Carrefour is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ITV plc and Carrefour SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour 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 Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA has no effect on the direction of ITV Plc i.e., ITV Plc and Carrefour go up and down completely randomly.
Pair Corralation between ITV Plc and Carrefour
Assuming the 90 days horizon ITV plc is expected to under-perform the Carrefour. In addition to that, ITV Plc is 1.54 times more volatile than Carrefour SA. It trades about -0.29 of its total potential returns per unit of risk. Carrefour SA is currently generating about -0.05 per unit of volatility. If you would invest 1,486 in Carrefour SA on August 25, 2024 and sell it today you would lose (37.00) from holding Carrefour SA or give up 2.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITV plc vs. Carrefour SA
Performance |
| Timeline |
| ITV plc |
| Carrefour SA |
ITV Plc and Carrefour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITV Plc and Carrefour
The main advantage of trading using opposite ITV Plc and Carrefour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITV Plc position performs unexpectedly, Carrefour 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 Carrefour will offset losses from the drop in Carrefour's long position.| ITV Plc vs. American Eagle Outfitters | ITV Plc vs. Strategic Education | ITV Plc vs. STRAYER EDUCATION | ITV Plc vs. Coeur Mining |
| Carrefour vs. United Rentals | Carrefour vs. COMPUTERSHARE | Carrefour vs. Alfa Financial Software | Carrefour vs. LG Display Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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