Correlation Between Sirius XM and News Corp

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

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

Diversification Opportunities for Sirius XM and News Corp

0.32

Correlation Coefficient

Sirius XM  News Corp

Weak diversification

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

Pair Corralation between Sirius XM and News Corp

Given the investment horizon of 90 days Sirius XM Holding is expected to under-perform the News Corp. In addition to that, Sirius XM is 2.53 times more volatile than News Corp A. It trades about -0.08 of its total potential returns per unit of risk. News Corp A is currently generating about 0.04 per unit of volatility. If you would invest  2,822  in News Corp A on August 30, 2024 and sell it today you would earn a total of  83.00  from holding News Corp A or generate 2.94% return on investment over 90 days.

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

Sirius XM Holding  vs.  News Corp A

Sirius XM Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sirius XM Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

News Corp A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, News Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sirius XM and News Corp

The main advantage of trading using opposite Sirius XM and News Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sirius XM 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 Sirius XM Holding 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.