Correlation Between News Corp and Modern Times
Can any of the company-specific risk be diversified away by investing in both News Corp and Modern Times 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 Modern Times 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 Modern Times Group, you can compare the effects of market volatilities on News Corp and Modern Times 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 Modern Times. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Corp and Modern Times.
Diversification Opportunities for News Corp and Modern Times
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between News and Modern is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding News Corp B and Modern Times Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modern Times 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 B are associated (or correlated) with Modern Times. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modern Times Group has no effect on the direction of News Corp i.e., News Corp and Modern Times go up and down completely randomly.
Pair Corralation between News Corp and Modern Times
Considering the 90-day investment horizon News Corp B is expected to under-perform the Modern Times. But the stock apears to be less risky and, when comparing its historical volatility, News Corp B is 1.65 times less risky than Modern Times. The stock trades about -0.25 of its potential returns per unit of risk. The Modern Times Group is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 7,650 in Modern Times Group on January 24, 2024 and sell it today you would earn a total of 1,600 from holding Modern Times Group or generate 20.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
News Corp B vs. Modern Times Group
Performance |
| Timeline |
| News Corp B |
| Modern Times Group |
News Corp and Modern Times Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News Corp and Modern Times
The main advantage of trading using opposite News Corp and Modern Times positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp position performs unexpectedly, Modern Times 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 Modern Times will offset losses from the drop in Modern Times' long position.The idea behind News Corp B and Modern Times 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.| Modern Times vs. Kinnevik Investment AB | Modern Times vs. Tele2 AB | Modern Times vs. Holmen AB | Modern Times vs. Husqvarna AB |
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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