Correlation Between ITV Plc and ITV PLC
Can any of the company-specific risk be diversified away by investing in both ITV Plc and ITV PLC 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 ITV PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITV plc and ITV PLC ADR, you can compare the effects of market volatilities on ITV Plc and ITV PLC 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 ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITV Plc and ITV PLC.
Diversification Opportunities for ITV Plc and ITV PLC
Average diversification
The 3 months correlation between ITV and ITV is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ITV plc and ITV PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV PLC ADR 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 ITV PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITV PLC ADR has no effect on the direction of ITV Plc i.e., ITV Plc and ITV PLC go up and down completely randomly.
Pair Corralation between ITV Plc and ITV PLC
Assuming the 90 days horizon ITV plc is expected to generate 1.94 times more return on investment than ITV PLC. However, ITV Plc is 1.94 times more volatile than ITV PLC ADR. It trades about 0.03 of its potential returns per unit of risk. ITV PLC ADR is currently generating about 0.01 per unit of risk. If you would invest 86.00 in ITV plc on August 24, 2024 and sell it today you would earn a total of 15.00 from holding ITV plc or generate 17.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 72.53% |
| Values | Daily Returns |
ITV plc vs. ITV PLC ADR
Performance |
| Timeline |
| ITV plc |
| ITV PLC ADR |
ITV Plc and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITV Plc and ITV PLC
The main advantage of trading using opposite ITV Plc and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITV Plc position performs unexpectedly, ITV PLC 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 ITV PLC will offset losses from the drop in ITV PLC's long position.The idea behind ITV plc and ITV PLC ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |