Correlation Between News Corp and Madison Square

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

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

Diversification Opportunities for News Corp and Madison Square

-0.24

Correlation Coefficient

News Corp  Madison Square

Very good diversification

The 3 months correlation between News and Madison is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding News Corp B and Madison Square Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Square Garden and News Corp 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 Corp B are associated (or correlated) with Madison Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Square Garden has no effect on the direction of News Corp i.e., News Corp and Madison Square go up and down completely randomly.

Pair Corralation between News Corp and Madison Square

Considering the 90-day investment horizon News Corp B is expected to generate 0.82 times more return on investment than Madison Square. However, News Corp B is 1.22 times less risky than Madison Square. It trades about 0.16 of its potential returns per unit of risk. Madison Square Garden is currently generating about -0.06 per unit of risk. If you would invest  3,178  in News Corp B on November 19, 2024 and sell it today you would earn a total of  308.00  from holding News Corp B or generate 9.69% return on investment over 90 days.

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

News Corp B  vs.  Madison Square Garden

News Corp B

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp B are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, News Corp may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Madison Square Garden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Madison Square Garden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Madison Square is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with News Corp and Madison Square

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

The idea behind News Corp B and Madison Square Garden 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.