Correlation Between ITV Plc and ProSiebenSat1 Media
Can any of the company-specific risk be diversified away by investing in both ITV Plc and ProSiebenSat1 Media 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 ProSiebenSat1 Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITV plc and ProSiebenSat1 Media SE, you can compare the effects of market volatilities on ITV Plc and ProSiebenSat1 Media 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 ProSiebenSat1 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITV Plc and ProSiebenSat1 Media.
Diversification Opportunities for ITV Plc and ProSiebenSat1 Media
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ITV and ProSiebenSat1 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ITV plc and ProSiebenSat1 Media SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProSiebenSat1 Media 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 ProSiebenSat1 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProSiebenSat1 Media has no effect on the direction of ITV Plc i.e., ITV Plc and ProSiebenSat1 Media go up and down completely randomly.
Pair Corralation between ITV Plc and ProSiebenSat1 Media
Assuming the 90 days horizon ITV plc is expected to under-perform the ProSiebenSat1 Media. But the stock apears to be less risky and, when comparing its historical volatility, ITV plc is 1.39 times less risky than ProSiebenSat1 Media. The stock trades about -0.21 of its potential returns per unit of risk. The ProSiebenSat1 Media SE is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 501.00 in ProSiebenSat1 Media SE on October 23, 2024 and sell it today you would earn a total of 4.00 from holding ProSiebenSat1 Media SE or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITV plc vs. ProSiebenSat1 Media SE
Performance |
| Timeline |
| ITV plc |
| ProSiebenSat1 Media |
ITV Plc and ProSiebenSat1 Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITV Plc and ProSiebenSat1 Media
The main advantage of trading using opposite ITV Plc and ProSiebenSat1 Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITV Plc position performs unexpectedly, ProSiebenSat1 Media 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 ProSiebenSat1 Media will offset losses from the drop in ProSiebenSat1 Media's long position.| ITV Plc vs. UNITED RENTALS | ITV Plc vs. Lendlease Group | ITV Plc vs. VIVA WINE GROUP | ITV Plc vs. Marie Brizard Wine |
| ProSiebenSat1 Media vs. VIVENDI UNSPONARD EO | ProSiebenSat1 Media vs. News Corporation | ProSiebenSat1 Media vs. News Corporation | ProSiebenSat1 Media vs. RTL Group SA |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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