Correlation Between John Wiley and News Corp

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

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

Diversification Opportunities for John Wiley and News Corp

-0.18

Correlation Coefficient

John Wiley  News Corp

Good diversification

The 3 months correlation between John and News is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding John Wiley Sons 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 John Wiley 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 John Wiley Sons 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 John Wiley i.e., John Wiley and News Corp go up and down completely randomly.

Pair Corralation between John Wiley and News Corp

Given the investment horizon of 90 days John Wiley Sons is expected to generate 2.31 times more return on investment than News Corp. However, John Wiley is 2.31 times more volatile than News Corp A. It trades about 0.01 of its potential returns per unit of risk. News Corp A is currently generating about -0.29 per unit of risk. If you would invest  3,795  in John Wiley Sons on January 31, 2024 and sell it today you would earn a total of  5.00  from holding John Wiley Sons or generate 0.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.82%
Values	Daily Returns

John Wiley Sons  vs.  News Corp A

John Wiley Sons

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Wiley Sons are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, John Wiley sustained solid returns over the last few months and may actually be approaching a breakup point.

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 John Wiley and News Corp

The main advantage of trading using opposite John Wiley and News Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Wiley 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 John Wiley Sons 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.