Correlation Between News and Sixt Leasing

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

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

Diversification Opportunities for News and Sixt Leasing

-0.03

Correlation Coefficient

News  Sixt Leasing

Good diversification

The 3 months correlation between News and Sixt is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding News Corp. and Sixt Leasing SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt Leasing SE and News 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 Corporation are associated (or correlated) with Sixt Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt Leasing SE has no effect on the direction of News i.e., News and Sixt Leasing go up and down completely randomly.

Pair Corralation between News and Sixt Leasing

Assuming the 90 days horizon News Corporation is expected to generate 1.4 times more return on investment than Sixt Leasing. However, News is 1.4 times more volatile than Sixt Leasing SE. It trades about -0.02 of its potential returns per unit of risk. Sixt Leasing SE is currently generating about -0.07 per unit of risk. If you would invest  2,780  in News Corporation on December 2, 2024 and sell it today you would lose (60.00) from holding News Corporation or give up 2.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

News Corp.  vs.  Sixt Leasing SE

News

Risk-Adjusted Performance

Very Weak

Over the last 90 days News Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, News is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sixt Leasing SE

Risk-Adjusted Performance

Very Weak

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

Pair Trading with News and Sixt Leasing

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

The idea behind News Corporation and Sixt Leasing SE 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.