Correlation Between Saga Communications and ITV Plc
Can any of the company-specific risk be diversified away by investing in both Saga Communications 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 Saga Communications and ITV Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saga Communications and ITV plc, you can compare the effects of market volatilities on Saga Communications 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 Saga Communications with a short position of ITV Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saga Communications and ITV Plc.
Diversification Opportunities for Saga Communications and ITV Plc
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Saga and ITV is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Saga Communications and ITV plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV plc and Saga Communications 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 Saga Communications 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 Saga Communications i.e., Saga Communications and ITV Plc go up and down completely randomly.
Pair Corralation between Saga Communications and ITV Plc
Considering the 90-day investment horizon Saga Communications is expected to under-perform the ITV Plc. But the stock apears to be less risky and, when comparing its historical volatility, Saga Communications is 1.73 times less risky than ITV Plc. The stock trades about -0.03 of its potential returns per unit of risk. The ITV plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 88.00 in ITV plc on August 31, 2024 and sell it today you would lose (7.00) from holding ITV plc or give up 7.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 63.37% |
| Values | Daily Returns |
Saga Communications vs. ITV plc
Performance |
| Timeline |
| Saga Communications |
| ITV plc |
Saga Communications and ITV Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saga Communications and ITV Plc
The main advantage of trading using opposite Saga Communications and ITV Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saga Communications 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.| Saga Communications vs. iHeartMedia Class A | Saga Communications vs. Beasley Broadcast Group | Saga Communications vs. Cumulus Media Class | Saga Communications vs. Mediaco Holding |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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