Correlation Between News Corp and Boston Properties

Can any of the company-specific risk be diversified away by investing in both News Corp and Boston Properties 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 Boston Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between News Corp Cl and Boston Properties, you can compare the effects of market volatilities on News Corp and Boston Properties 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 Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and Boston Properties.

Diversification Opportunities for News Corp and Boston Properties

0.2

Correlation Coefficient

News Corp  Boston Properties

Modest diversification

The 3 months correlation between News and Boston is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding News Corp Cl and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties 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 Cl are associated (or correlated) with Boston Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Properties has no effect on the direction of News Corp i.e., News Corp and Boston Properties go up and down completely randomly.

Pair Corralation between News Corp and Boston Properties

Assuming the 90 days trading horizon News Corp Cl is expected to generate 0.72 times more return on investment than Boston Properties. However, News Corp Cl is 1.4 times less risky than Boston Properties. It trades about -0.03 of its potential returns per unit of risk. Boston Properties is currently generating about -0.05 per unit of risk. If you would invest  2,789  in News Corp Cl on December 23, 2024 and sell it today you would lose (89.00) from holding News Corp Cl or give up 3.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

News Corp Cl  vs.  Boston Properties

News Corp Cl

Risk-Adjusted Performance

Very Weak

Over the last 90 days News Corp Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, News Corp is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Boston Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boston Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with News Corp and Boston Properties

The main advantage of trading using opposite News Corp and Boston Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, Boston Properties 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 Boston Properties will offset losses from the drop in Boston Properties' long position.

The idea behind News Corp Cl and Boston Properties 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.