Correlation Between News and TEGNA

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Can any of the company-specific risk be diversified away by investing in both News and TEGNA 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 TEGNA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between News Corporation and TEGNA Inc, you can compare the effects of market volatilities on News and TEGNA 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 TEGNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of News and TEGNA.

Diversification Opportunities for News and TEGNA

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between News and TEGNA is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding News Corp. and TEGNA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TEGNA Inc 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 TEGNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TEGNA Inc has no effect on the direction of News i.e., News and TEGNA go up and down completely randomly.

Pair Corralation between News and TEGNA

Assuming the 90 days trading horizon News is expected to generate 1.33 times less return on investment than TEGNA. But when comparing it to its historical volatility, News Corporation is 2.01 times less risky than TEGNA. It trades about 0.32 of its potential returns per unit of risk. TEGNA Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,530  in TEGNA Inc on September 1, 2024 and sell it today you would earn a total of  240.00  from holding TEGNA Inc or generate 15.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

News Corp.  vs.  TEGNA Inc

 Performance 
       Timeline  
News 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in News Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, News reported solid returns over the last few months and may actually be approaching a breakup point.
TEGNA Inc 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in TEGNA Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TEGNA reported solid returns over the last few months and may actually be approaching a breakup point.

News and TEGNA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with News and TEGNA

The main advantage of trading using opposite News and TEGNA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News position performs unexpectedly, TEGNA 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 TEGNA will offset losses from the drop in TEGNA's long position.
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The idea behind News Corporation and TEGNA Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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