Correlation Between News Corp and Dow Jones
Can any of the company-specific risk be diversified away by investing in both News Corp and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on News Corp and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and Dow Jones.
Diversification Opportunities for News Corp and Dow Jones
Very poor diversification
The 3 months correlation between News and Dow is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding News Corp B and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of News Corp i.e., News Corp and Dow Jones go up and down completely randomly.
Pair Corralation between News Corp and Dow Jones
Considering the 90-day investment horizon News Corp is expected to generate 1.41 times less return on investment than Dow Jones. In addition to that, News Corp is 1.04 times more volatile than Dow Jones Industrial. It trades about 0.26 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of volatility. If you would invest 4,254,422 in Dow Jones Industrial on November 1, 2024 and sell it today you would earn a total of 233,791 from holding Dow Jones Industrial or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
News Corp B vs. Dow Jones Industrial
Performance |
| Timeline |
News Corp and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
News Corp B
Pair trading matchups for News Corp
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with News Corp and Dow Jones
The main advantage of trading using opposite News Corp and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| News Corp vs. Fox Corp Class | News Corp vs. Liberty Media | News Corp vs. Marcus | News Corp vs. Madison Square Garden |
| Dow Jones vs. WEC Energy Group | Dow Jones vs. Pure Cycle | Dow Jones vs. Tandy Leather Factory | Dow Jones vs. Tapestry |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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