Correlation Between News and RTL GROUP
Can any of the company-specific risk be diversified away by investing in both News and RTL GROUP 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 RTL GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between News Corporation and RTL GROUP UNSPADR, you can compare the effects of market volatilities on News and RTL GROUP 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 RTL GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of News and RTL GROUP.
Diversification Opportunities for News and RTL GROUP
Pay attention - limited upside
The 3 months correlation between News and RTL is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding News Corp. and RTL GROUP UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL GROUP UNSPADR 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 RTL GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL GROUP UNSPADR has no effect on the direction of News i.e., News and RTL GROUP go up and down completely randomly.
Pair Corralation between News and RTL GROUP
Assuming the 90 days horizon News Corporation is expected to generate 0.42 times more return on investment than RTL GROUP. However, News Corporation is 2.39 times less risky than RTL GROUP. It trades about 0.19 of its potential returns per unit of risk. RTL GROUP UNSPADR is currently generating about -0.09 per unit of risk. If you would invest 2,380 in News Corporation on September 23, 2024 and sell it today you would earn a total of 280.00 from holding News Corporation or generate 11.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
News Corp. vs. RTL GROUP UNSPADR
Performance |
Timeline |
News |
RTL GROUP UNSPADR |
News and RTL GROUP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with News and RTL GROUP
The main advantage of trading using opposite News and RTL GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News position performs unexpectedly, RTL GROUP 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 RTL GROUP will offset losses from the drop in RTL GROUP's long position.News vs. CVR Medical Corp | News vs. LION ONE METALS | News vs. Yuexiu Transport Infrastructure | News vs. GREENX METALS LTD |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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