Correlation Between News Corp and New York

Can any of the company-specific risk be diversified away by investing in both News Corp and New York 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 New York 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 New York Times, you can compare the effects of market volatilities on News Corp and New York 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 New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and New York.

Diversification Opportunities for News Corp and New York

-0.19

Correlation Coefficient

News Corp  New York

Good diversification

The 3 months correlation between News and New is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding News Corp A and New York Times in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Times 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 New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Times has no effect on the direction of News Corp i.e., News Corp and New York go up and down completely randomly.

Pair Corralation between News Corp and New York

Given the investment horizon of 90 days News Corp is expected to generate 1.16 times less return on investment than New York. But when comparing it to its historical volatility, News Corp A is 1.01 times less risky than New York. It trades about 0.07 of its potential returns per unit of risk. New York Times is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,185  in New York Times on September 19, 2024 and sell it today you would earn a total of  2,272  from holding New York Times or generate 71.33% return on investment over 90 days.

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

News Corp A  vs.  New York Times

News Corp A

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp A are ranked lower than 7 (%) 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.

New York Times

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New York Times has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, New York 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 New York

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

The idea behind News Corp A and New York Times 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.