Correlation Between International Media and Newbury Street

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

By analyzing existing cross correlation between International Media Acquisition and Newbury Street Acquisition, you can compare the effects of market volatilities on International Media and Newbury Street 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 International Media with a short position of Newbury Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Media and Newbury Street.

Diversification Opportunities for International Media and Newbury Street

-0.37

Correlation Coefficient

International Media  Newbury Street

Very good diversification

The 3 months correlation between International and Newbury is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding International Media Acquisitio and Newbury Street Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newbury Street Acqui and International Media 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 International Media Acquisition are associated (or correlated) with Newbury Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newbury Street Acqui has no effect on the direction of International Media i.e., International Media and Newbury Street go up and down completely randomly.

Pair Corralation between International Media and Newbury Street

Assuming the 90 days horizon International Media is expected to generate 258.48 times less return on investment than Newbury Street. But when comparing it to its historical volatility, International Media Acquisition is 98.54 times less risky than Newbury Street. It trades about 0.07 of its potential returns per unit of risk. Newbury Street Acquisition is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3.82  in Newbury Street Acquisition on September 19, 2024 and sell it today you would earn a total of  5.18  from holding Newbury Street Acquisition or generate 135.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.02%
Values	Daily Returns

International Media Acquisitio  vs.  Newbury Street Acquisition

International Media

Risk-Adjusted Performance

0 of 100

Very Weak

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

Newbury Street Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newbury Street Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Newbury Street is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with International Media and Newbury Street

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

The idea behind International Media Acquisition and Newbury Street Acquisition 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.