Correlation Between Gannett and News Corp

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

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

Diversification Opportunities for Gannett and News Corp

-0.54

Correlation Coefficient

Gannett  News Corp

Excellent diversification

The 3 months correlation between Gannett and News is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gannett Co and News Corp A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Corp A and Gannett 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 Gannett Co are associated (or correlated) with News Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Corp A has no effect on the direction of Gannett i.e., Gannett and News Corp go up and down completely randomly.

Pair Corralation between Gannett and News Corp

Considering the 90-day investment horizon Gannett is expected to generate 4.53 times less return on investment than News Corp. In addition to that, Gannett is 2.36 times more volatile than News Corp A. It trades about 0.0 of its total potential returns per unit of risk. News Corp A is currently generating about 0.03 per unit of volatility. If you would invest  1,981  in News Corp A on January 20, 2024 and sell it today you would earn a total of  421.00  from holding News Corp A or generate 21.25% return on investment over 90 days.

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

Gannett Co  vs.  News Corp A

Gannett

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gannett Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Gannett may actually be approaching a critical reversion point that can send shares even higher in May 2024.

News Corp A

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gannett and News Corp

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

The idea behind Gannett Co and News Corp A 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.