Correlation Between News Corp and Manchester United

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

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

Diversification Opportunities for News Corp and Manchester United

0.76

Correlation Coefficient

News Corp  Manchester United

Poor diversification

The 3 months correlation between News and Manchester is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding News Corp B and Manchester United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manchester United and News Corp 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 News Corp B are associated (or correlated) with Manchester United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manchester United has no effect on the direction of News Corp i.e., News Corp and Manchester United go up and down completely randomly.

Pair Corralation between News Corp and Manchester United

Considering the 90-day investment horizon News Corp B is expected to generate 0.69 times more return on investment than Manchester United. However, News Corp B is 1.44 times less risky than Manchester United. It trades about 0.3 of its potential returns per unit of risk. Manchester United is currently generating about 0.16 per unit of risk. If you would invest  2,915  in News Corp B on August 31, 2024 and sell it today you would earn a total of  257.00  from holding News Corp B or generate 8.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

News Corp B  vs.  Manchester United

News Corp B

Risk-Adjusted Performance

14 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp B are ranked lower than 14 (%) 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.

Manchester United

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manchester United has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Manchester United is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with News Corp and Manchester United

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

The idea behind News Corp B and Manchester United 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.