Correlation Between ITV PLC and Primary Health
Can any of the company-specific risk be diversified away by investing in both ITV PLC and Primary Health 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 Primary Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITV PLC and Primary Health Properties, you can compare the effects of market volatilities on ITV PLC and Primary Health 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 Primary Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITV PLC and Primary Health.
Diversification Opportunities for ITV PLC and Primary Health
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ITV and Primary is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ITV PLC and Primary Health Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primary Health Properties 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 Primary Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primary Health Properties has no effect on the direction of ITV PLC i.e., ITV PLC and Primary Health go up and down completely randomly.
Pair Corralation between ITV PLC and Primary Health
Assuming the 90 days trading horizon ITV PLC is expected to generate 1.45 times more return on investment than Primary Health. However, ITV PLC is 1.45 times more volatile than Primary Health Properties. It trades about 0.03 of its potential returns per unit of risk. Primary Health Properties is currently generating about 0.03 per unit of risk. If you would invest 6,463 in ITV PLC on August 29, 2024 and sell it today you would earn a total of 722.00 from holding ITV PLC or generate 11.17% 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. Primary Health Properties
Performance |
| Timeline |
| ITV PLC |
| Primary Health Properties |
ITV PLC and Primary Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITV PLC and Primary Health
The main advantage of trading using opposite ITV PLC and Primary Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITV PLC position performs unexpectedly, Primary Health 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 Primary Health will offset losses from the drop in Primary Health's long position.| ITV PLC vs. Primary Health Properties | ITV PLC vs. Teradata Corp | ITV PLC vs. Charter Communications Cl | ITV PLC vs. Alliance Data Systems |
| Primary Health vs. Hammerson PLC | Primary Health vs. Supermarket Income REIT | Primary Health vs. Lendinvest PLC | Primary Health vs. Neometals |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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