Correlation Between Salem Media and ITV Plc
Can any of the company-specific risk be diversified away by investing in both Salem Media 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 Salem Media and ITV Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salem Media Group and ITV plc, you can compare the effects of market volatilities on Salem Media 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 Salem Media with a short position of ITV Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salem Media and ITV Plc.
Diversification Opportunities for Salem Media and ITV Plc
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Salem and ITV is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Salem Media Group and ITV plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV plc and Salem 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 Salem Media Group 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 Salem Media i.e., Salem Media and ITV Plc go up and down completely randomly.
Pair Corralation between Salem Media and ITV Plc
Given the investment horizon of 90 days Salem Media Group is expected to under-perform the ITV Plc. But the otc stock apears to be less risky and, when comparing its historical volatility, Salem Media Group is 1.35 times less risky than ITV Plc. The otc stock trades about -0.03 of its potential returns per unit of risk. The ITV plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 86.00 in ITV plc on August 27, 2024 and sell it today you would lose (5.00) from holding ITV plc or give up 5.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 43.89% |
| Values | Daily Returns |
Salem Media Group vs. ITV plc
Performance |
| Timeline |
| Salem Media Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ITV plc |
Salem Media and ITV Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salem Media and ITV Plc
The main advantage of trading using opposite Salem Media and ITV Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salem Media 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.| Salem Media vs. Mediaco Holding | Salem Media vs. Saga Communications | Salem Media vs. ProSiebenSat1 Media AG | Salem Media vs. Cumulus Media Class |
| ITV Plc vs. ProSiebenSat1 Media AG | ITV Plc vs. RTL Group SA | ITV Plc vs. iHeartMedia | 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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