Correlation Between News Corp and Software Acquisition
Can any of the company-specific risk be diversified away by investing in both News Corp and Software Acquisition 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 Software Acquisition 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 Software Acquisition Group, you can compare the effects of market volatilities on News Corp and Software Acquisition 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 Software Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and Software Acquisition.
Diversification Opportunities for News Corp and Software Acquisition
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between News and Software is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding News Corp A and Software Acquisition Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Acquisition 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 Software Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Acquisition has no effect on the direction of News Corp i.e., News Corp and Software Acquisition go up and down completely randomly.
Pair Corralation between News Corp and Software Acquisition
Given the investment horizon of 90 days News Corp A is expected to generate 0.29 times more return on investment than Software Acquisition. However, News Corp A is 3.41 times less risky than Software Acquisition. It trades about 0.03 of its potential returns per unit of risk. Software Acquisition Group is currently generating about -0.32 per unit of risk. If you would invest 2,885 in News Corp A on September 14, 2024 and sell it today you would earn a total of 13.00 from holding News Corp A or generate 0.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
News Corp A vs. Software Acquisition Group
Performance |
| Timeline |
| News Corp A |
| Software Acquisition |
News Corp and Software Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News Corp and Software Acquisition
The main advantage of trading using opposite News Corp and Software Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, Software Acquisition 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 Software Acquisition will offset losses from the drop in Software Acquisition's long position.| News Corp vs. Marcus | News Corp vs. Liberty Media | News Corp vs. Warner Music Group | News Corp vs. Fox Corp Class |
| Software Acquisition vs. Liberty Media | Software Acquisition vs. Atlanta Braves Holdings, | Software Acquisition vs. News Corp B | Software Acquisition vs. News Corp A |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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