Correlation Between ITV Plc and Cumulus Media
Can any of the company-specific risk be diversified away by investing in both ITV Plc and Cumulus 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 Cumulus 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 Cumulus Media Class, you can compare the effects of market volatilities on ITV Plc and Cumulus 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 Cumulus Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITV Plc and Cumulus Media.
Diversification Opportunities for ITV Plc and Cumulus Media
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ITV and Cumulus is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ITV plc and Cumulus Media Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumulus Media Class 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 Cumulus Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumulus Media Class has no effect on the direction of ITV Plc i.e., ITV Plc and Cumulus Media go up and down completely randomly.
Pair Corralation between ITV Plc and Cumulus Media
Assuming the 90 days horizon ITV Plc is expected to generate 2.12 times less return on investment than Cumulus Media. But when comparing it to its historical volatility, ITV plc is 2.54 times less risky than Cumulus Media. It trades about 0.24 of its potential returns per unit of risk. Cumulus Media Class is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 73.00 in Cumulus Media Class on November 3, 2024 and sell it today you would earn a total of 18.00 from holding Cumulus Media Class or generate 24.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITV plc vs. Cumulus Media Class
Performance |
| Timeline |
| ITV plc |
| Cumulus Media Class |
ITV Plc and Cumulus Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITV Plc and Cumulus Media
The main advantage of trading using opposite ITV Plc and Cumulus Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITV Plc position performs unexpectedly, Cumulus 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 Cumulus Media will offset losses from the drop in Cumulus Media's long position.| ITV Plc vs. ProSiebenSat1 Media AG | ITV Plc vs. RTL Group SA | ITV Plc vs. iHeartMedia | ITV Plc vs. TV Azteca SAB |
| Cumulus Media vs. E W Scripps | Cumulus Media vs. Gray Television | Cumulus Media vs. ProSiebenSat1 Media AG | Cumulus 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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