Correlation Between News Corp and World Wrestling
Can any of the company-specific risk be diversified away by investing in both News Corp and World Wrestling 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 World Wrestling 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 World Wrestling Entertainment, you can compare the effects of market volatilities on News Corp and World Wrestling 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 World Wrestling. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and World Wrestling.
Diversification Opportunities for News Corp and World Wrestling
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between News and World is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding News Corp B and World Wrestling Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Wrestling Ente 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 World Wrestling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Wrestling Ente has no effect on the direction of News Corp i.e., News Corp and World Wrestling go up and down completely randomly.
Pair Corralation between News Corp and World Wrestling
Considering the 90-day investment horizon News Corp is expected to generate 1.75 times less return on investment than World Wrestling. But when comparing it to its historical volatility, News Corp B is 1.39 times less risky than World Wrestling. It trades about 0.08 of its potential returns per unit of risk. World Wrestling Entertainment is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7,846 in World Wrestling Entertainment on August 24, 2024 and sell it today you would earn a total of 2,796 from holding World Wrestling Entertainment or generate 35.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 32.12% |
| Values | Daily Returns |
News Corp B vs. World Wrestling Entertainment
Performance |
| Timeline |
| News Corp B |
| World Wrestling Ente |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
News Corp and World Wrestling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News Corp and World Wrestling
The main advantage of trading using opposite News Corp and World Wrestling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, World Wrestling 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 World Wrestling will offset losses from the drop in World Wrestling's long position.| News Corp vs. Fox Corp Class | News Corp vs. Liberty Media | News Corp vs. Marcus | News Corp vs. Madison Square Garden |
| World Wrestling vs. Liberty Media | World Wrestling vs. Live Nation Entertainment | World Wrestling vs. Madison Square Garden | World Wrestling vs. Warner Music Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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