Correlation Between ITV PLC and IHeartMedia
Can any of the company-specific risk be diversified away by investing in both ITV PLC and IHeartMedia 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 IHeartMedia 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 iHeartMedia, you can compare the effects of market volatilities on ITV PLC and IHeartMedia 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 IHeartMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITV PLC and IHeartMedia.
Diversification Opportunities for ITV PLC and IHeartMedia
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ITV and IHeartMedia is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding ITV PLC ADR and iHeartMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia 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 IHeartMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iHeartMedia has no effect on the direction of ITV PLC i.e., ITV PLC and IHeartMedia go up and down completely randomly.
Pair Corralation between ITV PLC and IHeartMedia
Assuming the 90 days horizon ITV PLC ADR is expected to generate 0.75 times more return on investment than IHeartMedia. However, ITV PLC ADR is 1.34 times less risky than IHeartMedia. It trades about -0.23 of its potential returns per unit of risk. iHeartMedia is currently generating about -0.22 per unit of risk. If you would invest 975.00 in ITV PLC ADR on August 27, 2024 and sell it today you would lose (154.00) from holding ITV PLC ADR or give up 15.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITV PLC ADR vs. iHeartMedia
Performance |
| Timeline |
| ITV PLC ADR |
| iHeartMedia |
ITV PLC and IHeartMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITV PLC and IHeartMedia
The main advantage of trading using opposite ITV PLC and IHeartMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITV PLC position performs unexpectedly, IHeartMedia 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 IHeartMedia will offset losses from the drop in IHeartMedia'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 |
| IHeartMedia vs. RTL Group SA | IHeartMedia vs. ITV plc | IHeartMedia vs. ITV PLC ADR | IHeartMedia vs. ProSiebenSat1 Media AG |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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