Correlation Between News Corp and American Homes
Can any of the company-specific risk be diversified away by investing in both News Corp and American Homes 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 American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between News Corp Cl and American Homes 4, you can compare the effects of market volatilities on News Corp and American Homes 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 American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and American Homes.
Diversification Opportunities for News Corp and American Homes
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between News and American is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding News Corp Cl and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 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 Cl are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of News Corp i.e., News Corp and American Homes go up and down completely randomly.
Pair Corralation between News Corp and American Homes
Assuming the 90 days trading horizon News Corp Cl is expected to generate 1.24 times more return on investment than American Homes. However, News Corp is 1.24 times more volatile than American Homes 4. It trades about 0.07 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.05 per unit of risk. If you would invest 1,769 in News Corp Cl on August 30, 2024 and sell it today you would earn a total of 1,137 from holding News Corp Cl or generate 64.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.45% |
| Values | Daily Returns |
News Corp Cl vs. American Homes 4
Performance |
| Timeline |
| News Corp Cl |
| American Homes 4 |
News Corp and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News Corp and American Homes
The main advantage of trading using opposite News Corp and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| News Corp vs. Royal Bank of | News Corp vs. T Mobile | News Corp vs. Aeorema Communications Plc | News Corp vs. UNIQA Insurance Group |
| American Homes vs. Lendinvest PLC | American Homes vs. Neometals | American Homes vs. Albion Technology General | American Homes vs. Jupiter Fund Management |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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