Correlation Between News and EuropaCorp
Can any of the company-specific risk be diversified away by investing in both News and EuropaCorp 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 and EuropaCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between News Corporation and EuropaCorp, you can compare the effects of market volatilities on News and EuropaCorp 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 with a short position of EuropaCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of News and EuropaCorp.
Diversification Opportunities for News and EuropaCorp
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between News and EuropaCorp is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding News Corp. and EuropaCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EuropaCorp and News 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 Corporation are associated (or correlated) with EuropaCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EuropaCorp has no effect on the direction of News i.e., News and EuropaCorp go up and down completely randomly.
Pair Corralation between News and EuropaCorp
Assuming the 90 days trading horizon News Corporation is expected to generate 0.37 times more return on investment than EuropaCorp. However, News Corporation is 2.71 times less risky than EuropaCorp. It trades about 0.09 of its potential returns per unit of risk. EuropaCorp is currently generating about 0.01 per unit of risk. If you would invest 2,063 in News Corporation on September 2, 2024 and sell it today you would earn a total of 877.00 from holding News Corporation or generate 42.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
News Corp. vs. EuropaCorp
Performance |
| Timeline |
| News |
| EuropaCorp |
News and EuropaCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News and EuropaCorp
The main advantage of trading using opposite News and EuropaCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News position performs unexpectedly, EuropaCorp 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 EuropaCorp will offset losses from the drop in EuropaCorp's long position.| News vs. Tower One Wireless | News vs. bet at home AG | News vs. Aedas Homes SA | News vs. BE Semiconductor Industries |
| EuropaCorp vs. News Corporation | EuropaCorp vs. SES SA | EuropaCorp vs. TEGNA Inc | EuropaCorp vs. NorAm Drilling AS |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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