Correlation Between News and Talanx AG

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

By analyzing existing cross correlation between News Corporation and Talanx AG, you can compare the effects of market volatilities on News and Talanx AG 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 Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of News and Talanx AG.

Diversification Opportunities for News and Talanx AG

0.37

Correlation Coefficient

News  Talanx AG

Weak diversification

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

Pair Corralation between News and Talanx AG

Assuming the 90 days trading horizon News Corporation is expected to generate 0.98 times more return on investment than Talanx AG. However, News Corporation is 1.02 times less risky than Talanx AG. It trades about 0.24 of its potential returns per unit of risk. Talanx AG is currently generating about 0.05 per unit of risk. If you would invest  2,490  in News Corporation on September 5, 2024 and sell it today you would earn a total of  530.00  from holding News Corporation or generate 21.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

News Corp.  vs.  Talanx AG

News

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in News Corporation are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, News reported solid returns over the last few months and may actually be approaching a breakup point.

Talanx AG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Talanx AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with News and Talanx AG

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

The idea behind News Corporation and Talanx AG 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.