Correlation Between Gaia and Fox Corp
Can any of the company-specific risk be diversified away by investing in both Gaia and Fox 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 Gaia and Fox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaia Inc and Fox Corp Class, you can compare the effects of market volatilities on Gaia and Fox 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 Gaia with a short position of Fox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaia and Fox Corp.
Diversification Opportunities for Gaia and Fox Corp
Poor diversification
The 3 months correlation between Gaia and Fox is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gaia Inc and Fox Corp Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Corp Class and Gaia 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 Gaia Inc are associated (or correlated) with Fox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Corp Class has no effect on the direction of Gaia i.e., Gaia and Fox Corp go up and down completely randomly.
Pair Corralation between Gaia and Fox Corp
Given the investment horizon of 90 days Gaia Inc is expected to generate 2.49 times more return on investment than Fox Corp. However, Gaia is 2.49 times more volatile than Fox Corp Class. It trades about 0.1 of its potential returns per unit of risk. Fox Corp Class is currently generating about 0.24 per unit of risk. If you would invest 452.00 in Gaia Inc on August 24, 2024 and sell it today you would earn a total of 181.00 from holding Gaia Inc or generate 40.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaia Inc vs. Fox Corp Class
Performance |
| Timeline |
| Gaia Inc |
| Fox Corp Class |
Gaia and Fox Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaia and Fox Corp
The main advantage of trading using opposite Gaia and Fox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaia position performs unexpectedly, Fox 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 Fox Corp will offset losses from the drop in Fox Corp's long position.| Gaia vs. Roku Inc | Gaia vs. AMC Entertainment Holdings | Gaia vs. Paramount Global Class | Gaia vs. Warner Bros Discovery |
| Fox Corp vs. News Corp A | Fox Corp vs. News Corp B | Fox Corp vs. Paramount Global Class | Fox Corp vs. Liberty Media |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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