Correlation Between News Corp and Stagwell
Can any of the company-specific risk be diversified away by investing in both News Corp and Stagwell 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 Stagwell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between News Corp A and Stagwell, you can compare the effects of market volatilities on News Corp and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and Stagwell.
Diversification Opportunities for News Corp and Stagwell
Poor diversification
The 3 months correlation between News and Stagwell is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding News Corp A and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 A are associated (or correlated) with Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of News Corp i.e., News Corp and Stagwell go up and down completely randomly.
Pair Corralation between News Corp and Stagwell
Given the investment horizon of 90 days News Corp A is expected to generate 0.44 times more return on investment than Stagwell. However, News Corp A is 2.29 times less risky than Stagwell. It trades about 0.08 of its potential returns per unit of risk. Stagwell is currently generating about 0.03 per unit of risk. If you would invest 1,745 in News Corp A on September 5, 2024 and sell it today you would earn a total of 1,241 from holding News Corp A or generate 71.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
News Corp A vs. Stagwell
Performance |
| Timeline |
| News Corp A |
| Stagwell |
News Corp and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News Corp and Stagwell
The main advantage of trading using opposite News Corp and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.| News Corp vs. Marcus | News Corp vs. Liberty Media | News Corp vs. Warner Music Group | News Corp vs. Fox Corp Class |
| Stagwell vs. News Corp B | Stagwell vs. News Corp A | Stagwell vs. Atlanta Braves Holdings, | Stagwell vs. Liberty Media |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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