Correlation Between Gaia and News Corp

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

By analyzing existing cross correlation between Gaia Inc and News Corp B, you can compare the effects of market volatilities on Gaia and News Corp 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 Gaia with a short position of News Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaia and News Corp.

Diversification Opportunities for Gaia and News Corp

0.3

Correlation Coefficient

Gaia  News Corp

Weak diversification

The 3 months correlation between Gaia and News is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gaia Inc and News Corp B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Corp B and Gaia 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 Gaia Inc are associated (or correlated) with News Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Corp B has no effect on the direction of Gaia i.e., Gaia and News Corp go up and down completely randomly.

Pair Corralation between Gaia and News Corp

Given the investment horizon of 90 days Gaia is expected to generate 1.04 times less return on investment than News Corp. In addition to that, Gaia is 2.3 times more volatile than News Corp B. It trades about 0.04 of its total potential returns per unit of risk. News Corp B is currently generating about 0.1 per unit of volatility. If you would invest  1,613  in News Corp B on November 28, 2024 and sell it today you would earn a total of  1,577  from holding News Corp B or generate 97.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Gaia Inc  vs.  News Corp B

Gaia Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gaia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

News Corp B

Risk-Adjusted Performance

Very Weak

Over the last 90 days News Corp B 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Gaia and News Corp

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

The idea behind Gaia Inc and News Corp B 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.