Correlation Between News and Consolidated Communications
Can any of the company-specific risk be diversified away by investing in both News and Consolidated 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 and Consolidated Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between News Corporation and Consolidated Communications Holdings, you can compare the effects of market volatilities on News and Consolidated 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 with a short position of Consolidated Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of News and Consolidated Communications.
Diversification Opportunities for News and Consolidated Communications
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between News and Consolidated is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding News Corp. and Consolidated Communications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Communications 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 Consolidated Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Communications has no effect on the direction of News i.e., News and Consolidated Communications go up and down completely randomly.
Pair Corralation between News and Consolidated Communications
Assuming the 90 days trading horizon News Corporation is expected to generate 0.65 times more return on investment than Consolidated Communications. However, News Corporation is 1.55 times less risky than Consolidated Communications. It trades about 0.07 of its potential returns per unit of risk. Consolidated Communications Holdings is currently generating about 0.03 per unit of risk. If you would invest 1,715 in News Corporation on August 31, 2024 and sell it today you would earn a total of 1,285 from holding News Corporation or generate 74.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
News Corp. vs. Consolidated Communications Ho
Performance |
| Timeline |
| News |
| Consolidated Communications |
News and Consolidated Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News and Consolidated Communications
The main advantage of trading using opposite News and Consolidated Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News position performs unexpectedly, Consolidated 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 Consolidated Communications will offset losses from the drop in Consolidated Communications' long position.The idea behind News Corporation and Consolidated Communications Holdings 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.| Consolidated Communications vs. ATT Inc | Consolidated Communications vs. Deutsche Telekom AG | Consolidated Communications vs. Superior Plus Corp | Consolidated Communications vs. NMI Holdings |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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