Correlation Between News Corp and General Dynamics
Can any of the company-specific risk be diversified away by investing in both News Corp and General Dynamics 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 General Dynamics 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 General Dynamics Corp, you can compare the effects of market volatilities on News Corp and General Dynamics 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 General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and General Dynamics.
Diversification Opportunities for News Corp and General Dynamics
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between News and General is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding News Corp Cl and General Dynamics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics Corp 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 General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics Corp has no effect on the direction of News Corp i.e., News Corp and General Dynamics go up and down completely randomly.
Pair Corralation between News Corp and General Dynamics
Assuming the 90 days trading horizon News Corp is expected to generate 3.34 times less return on investment than General Dynamics. But when comparing it to its historical volatility, News Corp Cl is 5.77 times less risky than General Dynamics. It trades about 0.05 of its potential returns per unit of risk. General Dynamics Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 29,572 in General Dynamics Corp on September 3, 2024 and sell it today you would lose (1,211) from holding General Dynamics Corp or give up 4.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.45% |
| Values | Daily Returns |
News Corp Cl vs. General Dynamics Corp
Performance |
| Timeline |
| News Corp Cl |
| General Dynamics Corp |
News Corp and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News Corp and General Dynamics
The main advantage of trading using opposite News Corp and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, General Dynamics 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 General Dynamics will offset losses from the drop in General Dynamics' long position.| News Corp vs. Sunny Optical Technology | News Corp vs. Vitec Software Group | News Corp vs. Take Two Interactive Software | News Corp vs. Zurich Insurance Group |
| General Dynamics vs. LPKF Laser Electronics | General Dynamics vs. Bank of Ireland | General Dynamics vs. Teradata Corp | General Dynamics vs. Vulcan Materials Co |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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