Correlation Between Mediaco Holding and ITV PLC

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

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

Diversification Opportunities for Mediaco Holding and ITV PLC

0.32

Correlation Coefficient

Mediaco Holding  ITV PLC

Weak diversification

The 3 months correlation between Mediaco and ITV is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mediaco Holding 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 Mediaco Holding 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 Mediaco Holding 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 Mediaco Holding i.e., Mediaco Holding and ITV PLC go up and down completely randomly.

Pair Corralation between Mediaco Holding and ITV PLC

Given the investment horizon of 90 days Mediaco Holding is expected to generate 5.95 times more return on investment than ITV PLC. However, Mediaco Holding is 5.95 times more volatile than ITV PLC ADR. It trades about 0.04 of its potential returns per unit of risk. ITV PLC ADR is currently generating about 0.03 per unit of risk. If you would invest  125.00  in Mediaco Holding on September 12, 2024 and sell it today you would earn a total of  3.00  from holding Mediaco Holding or generate 2.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Mediaco Holding  vs.  ITV PLC ADR

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.

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 fairly strong basic indicators, ITV PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mediaco Holding and ITV PLC

The main advantage of trading using opposite Mediaco Holding and ITV PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mediaco Holding 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 Mediaco Holding 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.