Correlation Between Liberty Media and News Corp

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

By analyzing existing cross correlation between Liberty Media and News Corp B, you can compare the effects of market volatilities on Liberty Media and News Corp 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 Liberty Media with a short position of News Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and News Corp.

Diversification Opportunities for Liberty Media and News Corp

0.9

Correlation Coefficient

Liberty Media  News Corp

Almost no diversification

The 3 months correlation between Liberty and News is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and News Corp B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Corp B and Liberty Media 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 Liberty Media are associated (or correlated) with News Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Corp B has no effect on the direction of Liberty Media i.e., Liberty Media and News Corp go up and down completely randomly.

Pair Corralation between Liberty Media and News Corp

Assuming the 90 days horizon Liberty Media is expected to generate 38.98 times more return on investment than News Corp. However, Liberty Media is 38.98 times more volatile than News Corp B. It trades about 0.06 of its potential returns per unit of risk. News Corp B is currently generating about 0.11 per unit of risk. If you would invest  276.00  in Liberty Media on September 12, 2024 and sell it today you would earn a total of  6,677  from holding Liberty Media or generate 2419.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.43%
Values	Daily Returns

Liberty Media  vs.  News Corp B

Liberty Media

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Liberty Media sustained solid returns over the last few months and may actually be approaching a breakup point.

News Corp B

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp B are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, News Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Media and News Corp

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

The idea behind Liberty Media and News Corp B 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.