Correlation Between News Corp and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both News Corp and Spirent Communications 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 Spirent Communications 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 Spirent Communications plc, you can compare the effects of market volatilities on News Corp and Spirent Communications 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 Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and Spirent Communications.
Diversification Opportunities for News Corp and Spirent Communications
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between News and Spirent is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding News Corp Cl and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications 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 Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of News Corp i.e., News Corp and Spirent Communications go up and down completely randomly.
Pair Corralation between News Corp and Spirent Communications
Assuming the 90 days trading horizon News Corp Cl is expected to generate 1.7 times more return on investment than Spirent Communications. However, News Corp is 1.7 times more volatile than Spirent Communications plc. It trades about 0.05 of its potential returns per unit of risk. Spirent Communications plc is currently generating about -0.07 per unit of risk. If you would invest 2,728 in News Corp Cl on September 2, 2024 and sell it today you would earn a total of 186.00 from holding News Corp Cl or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
News Corp Cl vs. Spirent Communications plc
Performance |
| Timeline |
| News Corp Cl |
| Spirent Communications |
News Corp and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News Corp and Spirent Communications
The main advantage of trading using opposite News Corp and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' 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 |
| Spirent Communications vs. Samsung Electronics Co | Spirent Communications vs. Samsung Electronics Co | Spirent Communications vs. Hyundai Motor | Spirent Communications vs. Toyota Motor Corp |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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