Correlation Between LBG Media and Ithaca Energy
Can any of the company-specific risk be diversified away by investing in both LBG Media and Ithaca Energy 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 LBG Media and Ithaca Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LBG Media PLC and Ithaca Energy PLC, you can compare the effects of market volatilities on LBG Media and Ithaca Energy 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 LBG Media with a short position of Ithaca Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and Ithaca Energy.
Diversification Opportunities for LBG Media and Ithaca Energy
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between LBG and Ithaca is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC and Ithaca Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ithaca Energy PLC and LBG Media 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 LBG Media PLC are associated (or correlated) with Ithaca Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ithaca Energy PLC has no effect on the direction of LBG Media i.e., LBG Media and Ithaca Energy go up and down completely randomly.
Pair Corralation between LBG Media and Ithaca Energy
Assuming the 90 days trading horizon LBG Media is expected to generate 1.52 times less return on investment than Ithaca Energy. In addition to that, LBG Media is 1.36 times more volatile than Ithaca Energy PLC. It trades about 0.21 of its total potential returns per unit of risk. Ithaca Energy PLC is currently generating about 0.43 per unit of volatility. If you would invest 10,740 in Ithaca Energy PLC on October 11, 2024 and sell it today you would earn a total of 1,940 from holding Ithaca Energy PLC or generate 18.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LBG Media PLC vs. Ithaca Energy PLC
Performance |
| Timeline |
| LBG Media PLC |
| Ithaca Energy PLC |
LBG Media and Ithaca Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LBG Media and Ithaca Energy
The main advantage of trading using opposite LBG Media and Ithaca Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media position performs unexpectedly, Ithaca Energy 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 Ithaca Energy will offset losses from the drop in Ithaca Energy's long position.| LBG Media vs. Rheinmetall AG | LBG Media vs. BE Semiconductor Industries | LBG Media vs. EVS Broadcast Equipment | LBG Media vs. Golden Metal Resources |
| Ithaca Energy vs. Batm Advanced Communications | Ithaca Energy vs. MTI Wireless Edge | Ithaca Energy vs. Atresmedia | Ithaca Energy vs. LBG Media PLC |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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