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 ADR 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
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ITV and Cumulus is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ITV PLC ADR 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 ADR 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 ADR is expected to generate 0.44 times more return on investment than Cumulus Media. However, ITV PLC ADR is 2.25 times less risky than Cumulus Media. It trades about 0.04 of its potential returns per unit of risk. Cumulus Media Class is currently generating about -0.16 per unit of risk. If you would invest 713.00 in ITV PLC ADR on August 28, 2024 and sell it today you would earn a total of 108.00 from holding ITV PLC ADR or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.52% |
| Values | Daily Returns |
ITV PLC ADR vs. Cumulus Media Class
Performance |
| Timeline |
| ITV PLC ADR |
| 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. Walt Disney | Cumulus Media vs. Roku Inc | Cumulus Media vs. Netflix | Cumulus Media vs. AMC Entertainment Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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