Correlation Between Primary Health and ITV PLC
Can any of the company-specific risk be diversified away by investing in both Primary Health 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 Primary Health and ITV PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primary Health Properties and ITV PLC, you can compare the effects of market volatilities on Primary Health 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 Primary Health with a short position of ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primary Health and ITV PLC.
Diversification Opportunities for Primary Health and ITV PLC
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Primary and ITV is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Primary Health Properties and ITV PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV PLC and Primary Health 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 Primary Health Properties 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 has no effect on the direction of Primary Health i.e., Primary Health and ITV PLC go up and down completely randomly.
Pair Corralation between Primary Health and ITV PLC
Assuming the 90 days trading horizon Primary Health Properties is expected to generate 0.27 times more return on investment than ITV PLC. However, Primary Health Properties is 3.72 times less risky than ITV PLC. It trades about 0.0 of its potential returns per unit of risk. ITV PLC is currently generating about 0.0 per unit of risk. If you would invest 9,535 in Primary Health Properties on September 1, 2024 and sell it today you would lose (10.00) from holding Primary Health Properties or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Primary Health Properties vs. ITV PLC
Performance |
| Timeline |
| Primary Health Properties |
| ITV PLC |
Primary Health and ITV PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primary Health and ITV PLC
The main advantage of trading using opposite Primary Health and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primary Health 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.| Primary Health vs. Hammerson PLC | Primary Health vs. Workspace Group PLC | Primary Health vs. Supermarket Income REIT | Primary Health vs. Diversified Energy |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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