Correlation Between News Corp and Top Shelf

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

Diversification Opportunities for News Corp and Top Shelf

-0.41

Correlation Coefficient

News Corp  Top Shelf

Very good diversification

The 3 months correlation between News and Top is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding News Corp A and Top Shelf Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Shelf Brands 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 Top Shelf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Shelf Brands has no effect on the direction of News Corp i.e., News Corp and Top Shelf go up and down completely randomly.

Pair Corralation between News Corp and Top Shelf

Given the investment horizon of 90 days News Corp is expected to generate 161.9 times less return on investment than Top Shelf. But when comparing it to its historical volatility, News Corp A is 141.49 times less risky than Top Shelf. It trades about 0.09 of its potential returns per unit of risk. Top Shelf Brands is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Top Shelf Brands on May 7, 2025 and sell it today you would lose (0.01) from holding Top Shelf Brands or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

News Corp A  vs.  Top Shelf Brands

News Corp A

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp A are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, News Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Top Shelf Brands

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Top Shelf Brands are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Top Shelf unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with News Corp and Top Shelf

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

The idea behind News Corp A and Top Shelf Brands 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..