Correlation Between Fluent and National CineMedia
Can any of the company-specific risk be diversified away by investing in both Fluent and National CineMedia 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 Fluent and National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fluent Inc and National CineMedia, you can compare the effects of market volatilities on Fluent and National CineMedia 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 Fluent with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fluent and National CineMedia.
Diversification Opportunities for Fluent and National CineMedia
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fluent and National is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and Fluent 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 Fluent Inc are associated (or correlated) with National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of Fluent i.e., Fluent and National CineMedia go up and down completely randomly.
Pair Corralation between Fluent and National CineMedia
Given the investment horizon of 90 days Fluent Inc is expected to under-perform the National CineMedia. But the stock apears to be less risky and, when comparing its historical volatility, Fluent Inc is 1.56 times less risky than National CineMedia. The stock trades about -0.01 of its potential returns per unit of risk. The National CineMedia is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 409.00 in National CineMedia on August 27, 2024 and sell it today you would earn a total of 279.00 from holding National CineMedia or generate 68.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fluent Inc vs. National CineMedia
Performance |
| Timeline |
| Fluent Inc |
| National CineMedia |
Fluent and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fluent and National CineMedia
The main advantage of trading using opposite Fluent and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fluent position performs unexpectedly, National CineMedia 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 National CineMedia will offset losses from the drop in National CineMedia's long position.| Fluent vs. Mirriad Advertising plc | Fluent vs. INEO Tech Corp | Fluent vs. Innovid Corp | Fluent vs. Townsquare Media |
| National CineMedia vs. Mirriad Advertising plc | National CineMedia vs. INEO Tech Corp | National CineMedia vs. Innovid Corp | National CineMedia vs. Townsquare Media |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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