Correlation Between Hawkins and National CineMedia
Can any of the company-specific risk be diversified away by investing in both Hawkins 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 Hawkins and National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawkins and National CineMedia, you can compare the effects of market volatilities on Hawkins 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 Hawkins with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawkins and National CineMedia.
Diversification Opportunities for Hawkins and National CineMedia
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawkins and National is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hawkins and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and Hawkins 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 Hawkins 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 Hawkins i.e., Hawkins and National CineMedia go up and down completely randomly.
Pair Corralation between Hawkins and National CineMedia
Given the investment horizon of 90 days Hawkins is expected to generate 1.11 times more return on investment than National CineMedia. However, Hawkins is 1.11 times more volatile than National CineMedia. It trades about 0.2 of its potential returns per unit of risk. National CineMedia is currently generating about -0.05 per unit of risk. If you would invest 11,675 in Hawkins on August 29, 2024 and sell it today you would earn a total of 1,725 from holding Hawkins or generate 14.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawkins vs. National CineMedia
Performance |
| Timeline |
| Hawkins |
| National CineMedia |
Hawkins and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawkins and National CineMedia
The main advantage of trading using opposite Hawkins and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawkins 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.| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
| National CineMedia vs. Capital Income Builder | National CineMedia vs. Direxion Daily FTSE | National CineMedia vs. Dodge Global Stock | National CineMedia vs. Collegium Pharmaceutical |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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