Correlation Between National CineMedia and Disney
Can any of the company-specific risk be diversified away by investing in both National CineMedia and Disney 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 Disney into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Walt Disney, you can compare the effects of market volatilities on National CineMedia and Disney 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 Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Disney.
Diversification Opportunities for National CineMedia and Disney
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Disney is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of National CineMedia i.e., National CineMedia and Disney go up and down completely randomly.
Pair Corralation between National CineMedia and Disney
Given the investment horizon of 90 days National CineMedia is expected to generate 3.1 times more return on investment than Disney. However, National CineMedia is 3.1 times more volatile than Walt Disney. It trades about 0.06 of its potential returns per unit of risk. Walt Disney is currently generating about -0.02 per unit of risk. If you would invest 674.00 in National CineMedia on October 26, 2024 and sell it today you would earn a total of 16.00 from holding National CineMedia or generate 2.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National CineMedia vs. Walt Disney
Performance |
| Timeline |
| National CineMedia |
| Walt Disney |
National CineMedia and Disney Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Disney
The main advantage of trading using opposite National CineMedia and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney'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 |
| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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