Correlation Between News Corp and NOW
Can any of the company-specific risk be diversified away by investing in both News Corp and NOW 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 NOW 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 NOW Inc, you can compare the effects of market volatilities on News Corp and NOW 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 NOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and NOW.
Diversification Opportunities for News Corp and NOW
Very poor diversification
The 3 months correlation between News and NOW is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding News Corp Cl and NOW Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOW Inc 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 NOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOW Inc has no effect on the direction of News Corp i.e., News Corp and NOW go up and down completely randomly.
Pair Corralation between News Corp and NOW
Assuming the 90 days trading horizon News Corp is expected to generate 4.16 times less return on investment than NOW. But when comparing it to its historical volatility, News Corp Cl is 1.96 times less risky than NOW. It trades about 0.05 of its potential returns per unit of risk. NOW Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,299 in NOW Inc on August 31, 2024 and sell it today you would earn a total of 216.00 from holding NOW Inc or generate 16.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
News Corp Cl vs. NOW Inc
Performance |
| Timeline |
| News Corp Cl |
| NOW Inc |
News Corp and NOW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News Corp and NOW
The main advantage of trading using opposite News Corp and NOW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, NOW 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 NOW will offset losses from the drop in NOW's long position.| News Corp vs. CompuGroup Medical AG | News Corp vs. Tyson Foods Cl | News Corp vs. Fevertree Drinks Plc | News Corp vs. Monster Beverage Corp |
| NOW vs. Federal Realty Investment | NOW vs. Kinnevik Investment AB | NOW vs. Eco Animal Health | NOW vs. MyHealthChecked Plc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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