Correlation Between News Corp and State Street
Can any of the company-specific risk be diversified away by investing in both News Corp and State Street 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 State Street 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 State Street Corp, you can compare the effects of market volatilities on News Corp and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and State Street.
Diversification Opportunities for News Corp and State Street
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between News and State is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding News Corp Cl and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Corp has no effect on the direction of News Corp i.e., News Corp and State Street go up and down completely randomly.
Pair Corralation between News Corp and State Street
Assuming the 90 days trading horizon News Corp is expected to generate 3.31 times less return on investment than State Street. In addition to that, News Corp is 1.01 times more volatile than State Street Corp. It trades about 0.05 of its total potential returns per unit of risk. State Street Corp is currently generating about 0.18 per unit of volatility. If you would invest 8,612 in State Street Corp on September 2, 2024 and sell it today you would earn a total of 1,308 from holding State Street Corp or generate 15.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
News Corp Cl vs. State Street Corp
Performance |
| Timeline |
| News Corp Cl |
| State Street Corp |
News Corp and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News Corp and State Street
The main advantage of trading using opposite News Corp and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| News Corp vs. Uniper SE | News Corp vs. Mulberry Group PLC | News Corp vs. London Security Plc | News Corp vs. Triad Group PLC |
| State Street vs. Tatton Asset Management | State Street vs. Spirent Communications plc | State Street vs. Martin Marietta Materials | State Street vs. Aeorema Communications 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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