Correlation Between FC Investment and News Corp
Can any of the company-specific risk be diversified away by investing in both FC Investment and News Corp 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 FC Investment and News Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FC Investment Trust and News Corp Cl, you can compare the effects of market volatilities on FC Investment and News Corp 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 FC Investment with a short position of News Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and News Corp.
Diversification Opportunities for FC Investment and News Corp
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FCIT and News is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and News Corp Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Corp Cl and FC Investment 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 FC Investment Trust are associated (or correlated) with News Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Corp Cl has no effect on the direction of FC Investment i.e., FC Investment and News Corp go up and down completely randomly.
Pair Corralation between FC Investment and News Corp
Assuming the 90 days trading horizon FC Investment is expected to generate 2.61 times less return on investment than News Corp. But when comparing it to its historical volatility, FC Investment Trust is 1.72 times less risky than News Corp. It trades about 0.06 of its potential returns per unit of risk. News Corp Cl is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,550 in News Corp Cl on December 1, 2024 and sell it today you would earn a total of 1,272 from holding News Corp Cl or generate 82.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.4% |
| Values | Daily Returns |
FC Investment Trust vs. News Corp Cl
Performance |
| Timeline |
| FC Investment Trust |
| News Corp Cl |
FC Investment and News Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and News Corp
The main advantage of trading using opposite FC Investment and News Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment position performs unexpectedly, News Corp 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 News Corp will offset losses from the drop in News Corp's long position.| FC Investment vs. Silvercorp Metals | FC Investment vs. Caledonia Mining | FC Investment vs. Verizon Communications | FC Investment vs. Tata Steel Limited |
| News Corp vs. Arrow Electronics | News Corp vs. Spirent Communications plc | News Corp vs. Bigblu Broadband PLC | News Corp vs. Team Internet Group |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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