Correlation Between ITV Plc and Liberty Media

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Can any of the company-specific risk be diversified away by investing in both ITV Plc and Liberty 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 Liberty 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 Liberty Media, you can compare the effects of market volatilities on ITV Plc and Liberty 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 Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITV Plc and Liberty Media.

Diversification Opportunities for ITV Plc and Liberty Media

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ITV and Liberty is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ITV plc and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media has no effect on the direction of ITV Plc i.e., ITV Plc and Liberty Media go up and down completely randomly.

Pair Corralation between ITV Plc and Liberty Media

If you would invest  2,251  in Liberty Media on August 28, 2024 and sell it today you would earn a total of  0.00  from holding Liberty Media or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy4.76%
ValuesDaily Returns

ITV plc  vs.  Liberty Media

 Performance 
       Timeline  
ITV plc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ITV plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Liberty Media 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Liberty Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

ITV Plc and Liberty Media Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ITV Plc and Liberty Media

The main advantage of trading using opposite ITV Plc and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITV Plc position performs unexpectedly, Liberty 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 Liberty Media will offset losses from the drop in Liberty Media's long position.
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The idea behind ITV plc and Liberty Media 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.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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