Correlation Between National CineMedia and BCE
Can any of the company-specific risk be diversified away by investing in both National CineMedia and BCE 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 National CineMedia and BCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and BCE Inc, you can compare the effects of market volatilities on National CineMedia and BCE 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 National CineMedia with a short position of BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and BCE.
Diversification Opportunities for National CineMedia and BCE
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and BCE is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc and National CineMedia 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 National CineMedia are associated (or correlated) with BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of National CineMedia i.e., National CineMedia and BCE go up and down completely randomly.
Pair Corralation between National CineMedia and BCE
Given the investment horizon of 90 days National CineMedia is expected to generate 1.45 times more return on investment than BCE. However, National CineMedia is 1.45 times more volatile than BCE Inc. It trades about 0.0 of its potential returns per unit of risk. BCE Inc is currently generating about -0.45 per unit of risk. If you would invest 693.00 in National CineMedia on August 24, 2024 and sell it today you would lose (5.00) from holding National CineMedia or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National CineMedia vs. BCE Inc
Performance |
| Timeline |
| National CineMedia |
| BCE Inc |
National CineMedia and BCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and BCE
The main advantage of trading using opposite National CineMedia and BCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, BCE 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 BCE will offset losses from the drop in BCE's long position.| National CineMedia vs. MGO Global Common | National CineMedia vs. Baosheng Media Group | National CineMedia vs. Impact Fusion International | National CineMedia vs. ZW Data Action |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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