Correlation Between Lemonade and ITV PLC
Can any of the company-specific risk be diversified away by investing in both Lemonade 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 Lemonade and ITV PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lemonade and ITV PLC ADR, you can compare the effects of market volatilities on Lemonade 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 Lemonade with a short position of ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemonade and ITV PLC.
Diversification Opportunities for Lemonade and ITV PLC
Pay attention - limited upside
The 3 months correlation between Lemonade and ITV is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lemonade 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 Lemonade 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 Lemonade 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 Lemonade i.e., Lemonade and ITV PLC go up and down completely randomly.
Pair Corralation between Lemonade and ITV PLC
Given the investment horizon of 90 days Lemonade is expected to generate 3.13 times more return on investment than ITV PLC. However, Lemonade is 3.13 times more volatile than ITV PLC ADR. It trades about 0.54 of its potential returns per unit of risk. ITV PLC ADR is currently generating about -0.32 per unit of risk. If you would invest 1,861 in Lemonade on August 24, 2024 and sell it today you would earn a total of 3,175 from holding Lemonade or generate 170.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lemonade vs. ITV PLC ADR
Performance |
| Timeline |
| Lemonade |
| ITV PLC ADR |
Lemonade and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lemonade and ITV PLC
The main advantage of trading using opposite Lemonade and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemonade 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.| Lemonade vs. Amtech Systems | Lemonade vs. Gold Fields Ltd | Lemonade vs. Aegean Airlines SA | Lemonade vs. Merck Company |
| ITV PLC vs. ITV plc | ITV PLC vs. iHeartMedia | ITV PLC vs. ProSiebenSat1 Media AG | ITV PLC vs. TV Azteca SAB |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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