Correlation Between ITV Plc and SES SA
Can any of the company-specific risk be diversified away by investing in both ITV Plc and SES SA 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 SES SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITV plc and SES SA, you can compare the effects of market volatilities on ITV Plc and SES SA 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 SES SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITV Plc and SES SA.
Diversification Opportunities for ITV Plc and SES SA
Poor diversification
The 3 months correlation between ITV and SES is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ITV plc and SES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SES 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 SES SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SES SA has no effect on the direction of ITV Plc i.e., ITV Plc and SES SA go up and down completely randomly.
Pair Corralation between ITV Plc and SES SA
Assuming the 90 days horizon ITV plc is expected to generate 1.19 times more return on investment than SES SA. However, ITV Plc is 1.19 times more volatile than SES SA. It trades about 0.02 of its potential returns per unit of risk. SES SA is currently generating about -0.03 per unit of risk. If you would invest 80.00 in ITV plc on August 29, 2024 and sell it today you would earn a total of 5.00 from holding ITV plc or generate 6.25% 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. SES SA
Performance |
| Timeline |
| ITV plc |
| SES SA |
ITV Plc and SES SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITV Plc and SES SA
The main advantage of trading using opposite ITV Plc and SES SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITV Plc position performs unexpectedly, SES SA 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 SES SA will offset losses from the drop in SES SA's long position.| ITV Plc vs. NorAm Drilling AS | ITV Plc vs. Superior Plus Corp | ITV Plc vs. NMI Holdings | ITV Plc vs. Origin Agritech |
| SES SA vs. KRISPY KREME DL 01 | SES SA vs. Consolidated Communications Holdings | SES SA vs. INTER CARS SA | SES SA vs. GRUPO CARSO A1 |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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