Correlation Between ITV Plc and Emmis Communications

Can any of the company-specific risk be diversified away by investing in both ITV Plc and Emmis Communications 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 ITV Plc and Emmis Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ITV plc and Emmis Communications Corp, you can compare the effects of market volatilities on ITV Plc and Emmis Communications 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 ITV Plc with a short position of Emmis Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITV Plc and Emmis Communications.

Diversification Opportunities for ITV Plc and Emmis Communications

0.0

Correlation Coefficient

ITV Plc  Emmis Communications

Pay attention - limited upside

The 3 months correlation between ITV and Emmis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ITV plc and Emmis Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmis Communications Corp and ITV Plc 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 ITV plc are associated (or correlated) with Emmis Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmis Communications Corp has no effect on the direction of ITV Plc i.e., ITV Plc and Emmis Communications go up and down completely randomly.

Pair Corralation between ITV Plc and Emmis Communications

If you would invest  81.00  in ITV plc on December 27, 2024 and sell it today you would earn a total of  11.00  from holding ITV plc or generate 13.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ITV plc  vs.  Emmis Communications Corp

ITV plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ITV plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ITV Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Emmis Communications Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emmis Communications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Emmis Communications is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ITV Plc and Emmis Communications

The main advantage of trading using opposite ITV Plc and Emmis Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITV Plc position performs unexpectedly, Emmis Communications 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 Emmis Communications will offset losses from the drop in Emmis Communications' long position.

The idea behind ITV plc and Emmis Communications Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.