Correlation Between National CineMedia and Bassett Furniture
Can any of the company-specific risk be diversified away by investing in both National CineMedia and Bassett Furniture 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 Bassett Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Bassett Furniture Industries, you can compare the effects of market volatilities on National CineMedia and Bassett Furniture 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 Bassett Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Bassett Furniture.
Diversification Opportunities for National CineMedia and Bassett Furniture
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Bassett is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Bassett Furniture Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bassett Furniture 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 Bassett Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bassett Furniture has no effect on the direction of National CineMedia i.e., National CineMedia and Bassett Furniture go up and down completely randomly.
Pair Corralation between National CineMedia and Bassett Furniture
Given the investment horizon of 90 days National CineMedia is expected to generate 0.79 times more return on investment than Bassett Furniture. However, National CineMedia is 1.26 times less risky than Bassett Furniture. It trades about 0.29 of its potential returns per unit of risk. Bassett Furniture Industries is currently generating about -0.14 per unit of risk. If you would invest 666.00 in National CineMedia on September 14, 2024 and sell it today you would earn a total of 71.00 from holding National CineMedia or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National CineMedia vs. Bassett Furniture Industries
Performance |
| Timeline |
| National CineMedia |
| Bassett Furniture |
National CineMedia and Bassett Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Bassett Furniture
The main advantage of trading using opposite National CineMedia and Bassett Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, Bassett Furniture 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 Bassett Furniture will offset losses from the drop in Bassett Furniture's long position.| National CineMedia vs. MGO Global Common | National CineMedia vs. Baosheng Media Group | National CineMedia vs. Glory Star New | National CineMedia vs. Impact Fusion International |
| Bassett Furniture vs. Hooker Furniture | Bassett Furniture vs. Flexsteel Industries | Bassett Furniture vs. Haverty Furniture Companies | Bassett Furniture vs. La Z Boy Incorporated |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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