Correlation Between ITV PLC and Mediaco Holding

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

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

Diversification Opportunities for ITV PLC and Mediaco Holding

0.38

Correlation Coefficient

ITV PLC  Mediaco Holding

Weak diversification

The 3 months correlation between ITV and Mediaco is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ITV PLC ADR and Mediaco Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mediaco Holding 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 ADR are associated (or correlated) with Mediaco Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mediaco Holding has no effect on the direction of ITV PLC i.e., ITV PLC and Mediaco Holding go up and down completely randomly.

Pair Corralation between ITV PLC and Mediaco Holding

Assuming the 90 days horizon ITV PLC ADR is expected to generate 0.24 times more return on investment than Mediaco Holding. However, ITV PLC ADR is 4.17 times less risky than Mediaco Holding. It trades about -0.05 of its potential returns per unit of risk. Mediaco Holding is currently generating about -0.1 per unit of risk. If you would invest  1,011  in ITV PLC ADR on September 4, 2024 and sell it today you would lose (98.00) from holding ITV PLC ADR or give up 9.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

ITV PLC ADR  vs.  Mediaco Holding

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.

Mediaco Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mediaco Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ITV PLC and Mediaco Holding

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

The idea behind ITV PLC ADR and Mediaco Holding 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 Anywhere module to track or share privately all of your investments from the convenience of any device.