Correlation Between News Corp and Acciona SA

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

Diversification Opportunities for News Corp and Acciona SA

-0.81
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between News and Acciona is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding News Corp B and Acciona SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona SA and News Corp 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 Corp B are associated (or correlated) with Acciona SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona SA has no effect on the direction of News Corp i.e., News Corp and Acciona SA go up and down completely randomly.

Pair Corralation between News Corp and Acciona SA

Considering the 90-day investment horizon News Corp B is expected to generate 0.46 times more return on investment than Acciona SA. However, News Corp B is 2.15 times less risky than Acciona SA. It trades about 0.4 of its potential returns per unit of risk. Acciona SA is currently generating about -0.07 per unit of risk. If you would invest  2,824  in News Corp B on August 29, 2024 and sell it today you would earn a total of  377.00  from holding News Corp B or generate 13.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

News Corp B  vs.  Acciona SA

 Performance 
       Timeline  
News Corp B 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in News Corp B are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, News Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Acciona SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Acciona SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

News Corp and Acciona SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with News Corp and Acciona SA

The main advantage of trading using opposite News Corp and Acciona SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, Acciona SA 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 Acciona SA will offset losses from the drop in Acciona SA's long position.
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The idea behind News Corp B and Acciona SA 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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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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