Correlation Between News Corp and MT Bank

Can any of the company-specific risk be diversified away by investing in both News Corp and MT Bank 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 MT Bank 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 MT Bank Corp, you can compare the effects of market volatilities on News Corp and MT Bank 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 MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and MT Bank.

Diversification Opportunities for News Corp and MT Bank

0.73

Correlation Coefficient

News Corp  MT Bank

Poor diversification

The 3 months correlation between News and 0JW2 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding News Corp Cl and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp 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 MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of News Corp i.e., News Corp and MT Bank go up and down completely randomly.

Pair Corralation between News Corp and MT Bank

Assuming the 90 days trading horizon News Corp Cl is expected to generate 0.93 times more return on investment than MT Bank. However, News Corp Cl is 1.07 times less risky than MT Bank. It trades about -0.02 of its potential returns per unit of risk. MT Bank Corp is currently generating about -0.07 per unit of risk. If you would invest  2,720  in News Corp Cl on December 30, 2024 and sell it today you would lose (60.00) from holding News Corp Cl or give up 2.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.31%
Values	Daily Returns

News Corp Cl  vs.  MT Bank Corp

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

MT Bank Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days MT Bank Corp 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 MT Bank

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

The idea behind News Corp Cl and MT Bank Corp 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..