Correlation Between Greencore Group and National CineMedia
Can any of the company-specific risk be diversified away by investing in both Greencore Group 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 Greencore Group and National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greencore Group PLC and National CineMedia, you can compare the effects of market volatilities on Greencore Group 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 Greencore Group with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greencore Group and National CineMedia.
Diversification Opportunities for Greencore Group and National CineMedia
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Greencore and National is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Greencore Group PLC and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and Greencore Group 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 Greencore Group PLC 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 Greencore Group i.e., Greencore Group and National CineMedia go up and down completely randomly.
Pair Corralation between Greencore Group and National CineMedia
Assuming the 90 days horizon Greencore Group PLC is expected to generate 0.81 times more return on investment than National CineMedia. However, Greencore Group PLC is 1.23 times less risky than National CineMedia. It trades about 0.12 of its potential returns per unit of risk. National CineMedia is currently generating about 0.05 per unit of risk. If you would invest 1,051 in Greencore Group PLC on September 5, 2024 and sell it today you would earn a total of 69.00 from holding Greencore Group PLC or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greencore Group PLC vs. National CineMedia
Performance |
| Timeline |
| Greencore Group PLC |
| National CineMedia |
Greencore Group and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greencore Group and National CineMedia
The main advantage of trading using opposite Greencore Group and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greencore Group 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.| Greencore Group vs. Kellanova | Greencore Group vs. Lancaster Colony | Greencore Group vs. The A2 Milk | Greencore Group vs. Artisan Consumer Goods |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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