Correlation Between News Corp and Formula One

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

By analyzing existing cross correlation between News Corp A and Formula One Group, you can compare the effects of market volatilities on News Corp and Formula One 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 Formula One. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and Formula One.

Diversification Opportunities for News Corp and Formula One

-0.39

Correlation Coefficient

News Corp  Formula One

Very good diversification

The 3 months correlation between News and Formula is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding News Corp A and Formula One Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formula One Group 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 A are associated (or correlated) with Formula One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formula One Group has no effect on the direction of News Corp i.e., News Corp and Formula One go up and down completely randomly.

Pair Corralation between News Corp and Formula One

If you would invest  2,862  in News Corp A on September 16, 2024 and sell it today you would lose (1.00) from holding News Corp A or give up 0.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

News Corp A  vs.  Formula One Group

News Corp A

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, News Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Formula One Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Formula One Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Formula One is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with News Corp and Formula One

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

The idea behind News Corp A and Formula One Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.