Correlation Between RTL Group and ITV Plc

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

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

Diversification Opportunities for RTL Group and ITV Plc

0.0

Correlation Coefficient

RTL Group  ITV Plc

Pay attention - limited upside

The 3 months correlation between RTL and ITV is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RTL Group SA and ITV plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV plc and RTL Group 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 RTL Group SA 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 RTL Group i.e., RTL Group and ITV Plc go up and down completely randomly.

Pair Corralation between RTL Group and ITV Plc

If you would invest  4,288  in RTL Group SA on September 3, 2024 and sell it today you would earn a total of  0.00  from holding RTL Group SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

RTL Group SA  vs.  ITV plc

RTL Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RTL Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RTL Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ITV plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITV plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with RTL Group and ITV Plc

The main advantage of trading using opposite RTL Group and ITV Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RTL Group 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.

The idea behind RTL Group SA and ITV plc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.