Correlation Between Tegna and ITV Plc

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

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

Diversification Opportunities for Tegna and ITV Plc

0.08

Correlation Coefficient

Tegna  ITV Plc

Significant diversification

The 3 months correlation between Tegna and ITV is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tegna Inc and ITV plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV plc and Tegna 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 Tegna 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 has no effect on the direction of Tegna i.e., Tegna and ITV Plc go up and down completely randomly.

Pair Corralation between Tegna and ITV Plc

Given the investment horizon of 90 days Tegna is expected to generate 1.65 times less return on investment than ITV Plc. In addition to that, Tegna is 1.28 times more volatile than ITV plc. It trades about 0.1 of its total potential returns per unit of risk. ITV plc is currently generating about 0.21 per unit of volatility. If you would invest  68.00  in ITV plc on February 9, 2024 and sell it today you would earn a total of  4.00  from holding ITV plc or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Tegna Inc  vs.  ITV plc

Tegna Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tegna Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tegna is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 nearly stable basic indicators, ITV Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tegna and ITV Plc

The main advantage of trading using opposite Tegna and ITV Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tegna 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 Tegna Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.