Correlation Between Cineplex and NFI
Can any of the company-specific risk be diversified away by investing in both Cineplex and NFI 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 Cineplex and NFI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cineplex and NFI Group, you can compare the effects of market volatilities on Cineplex and NFI 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 Cineplex with a short position of NFI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cineplex and NFI.
Diversification Opportunities for Cineplex and NFI
Very poor diversification
The 3 months correlation between Cineplex and NFI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cineplex and NFI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFI Group and Cineplex 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 Cineplex are associated (or correlated) with NFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFI Group has no effect on the direction of Cineplex i.e., Cineplex and NFI go up and down completely randomly.
Pair Corralation between Cineplex and NFI
Assuming the 90 days trading horizon Cineplex is expected to generate 0.89 times more return on investment than NFI. However, Cineplex is 1.12 times less risky than NFI. It trades about -0.07 of its potential returns per unit of risk. NFI Group is currently generating about -0.32 per unit of risk. If you would invest 1,078 in Cineplex on August 25, 2024 and sell it today you would lose (57.00) from holding Cineplex or give up 5.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cineplex vs. NFI Group
Performance |
| Timeline |
| Cineplex |
| NFI Group |
Cineplex and NFI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cineplex and NFI
The main advantage of trading using opposite Cineplex and NFI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cineplex position performs unexpectedly, NFI 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 NFI will offset losses from the drop in NFI's long position.| Cineplex vs. Air Canada | Cineplex vs. BlackBerry | Cineplex vs. Suncor Energy | Cineplex vs. Drone Delivery Canada |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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