Correlation Between New York and News Corp

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

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

Diversification Opportunities for New York and News Corp

-0.19

Correlation Coefficient

New York  News Corp

Good diversification

The 3 months correlation between New and News is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding New York Times and News Corp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Corp A and New York 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 New York Times 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 A has no effect on the direction of New York i.e., New York and News Corp go up and down completely randomly.

Pair Corralation between New York and News Corp

Considering the 90-day investment horizon New York Times is expected to generate 1.09 times more return on investment than News Corp. However, New York is 1.09 times more volatile than News Corp A. It trades about 0.05 of its potential returns per unit of risk. News Corp A is currently generating about 0.04 per unit of risk. If you would invest  5,067  in New York Times on September 19, 2024 and sell it today you would earn a total of  409.00  from holding New York Times or generate 8.07% return on investment over 90 days.

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

New York Times  vs.  News Corp A

New York Times

Risk-Adjusted Performance

0 of 100

Very Weak

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

News Corp A

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, News Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with New York and News Corp

The main advantage of trading using opposite New York and News Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York 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 New York Times and News Corp A 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.