Correlation Between Audacy and ITV PLC

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

By analyzing existing cross correlation between Audacy Inc and ITV PLC ADR, you can compare the effects of market volatilities on Audacy 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 Audacy with a short position of ITV PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Audacy and ITV PLC.

Diversification Opportunities for Audacy and ITV PLC

0.0

Correlation Coefficient

Audacy  ITV PLC

Pay attention - limited upside

The 3 months correlation between Audacy and ITV is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Audacy Inc 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 Audacy 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 Audacy Inc 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 Audacy i.e., Audacy and ITV PLC go up and down completely randomly.

Pair Corralation between Audacy and ITV PLC

If you would invest (100.00) in Audacy Inc on September 4, 2024 and sell it today you would earn a total of  100.00  from holding Audacy Inc or generate -100.0% return on investment over 90 days.

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

Audacy Inc  vs.  ITV PLC ADR

Audacy Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Audacy Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Audacy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ITV PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITV PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Audacy and ITV PLC

The main advantage of trading using opposite Audacy and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Audacy 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 Audacy Inc and ITV PLC ADR 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.