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 ADR, 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
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Saga and ITV is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Saga Communications 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 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 ADR 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 1.51 times less risky than ITV PLC. The stock trades about -0.17 of its potential returns per unit of risk. The ITV PLC ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,069 in ITV PLC ADR on June 24, 2024 and sell it today you would earn a total of 4.00 from holding ITV PLC ADR or generate 0.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Saga Communications vs. ITV PLC ADR
Performance |
Timeline |
Saga Communications |
ITV PLC ADR |
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. News Corp B | Saga Communications vs. News Corp A | Saga Communications vs. Live Nation Entertainment | Saga Communications vs. Paramount Global Class |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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