Correlation Between National CineMedia and Fomento Economico
Can any of the company-specific risk be diversified away by investing in both National CineMedia and Fomento Economico 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 Fomento Economico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Fomento Economico Mexicano, you can compare the effects of market volatilities on National CineMedia and Fomento Economico 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 Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Fomento Economico.
Diversification Opportunities for National CineMedia and Fomento Economico
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and Fomento is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico 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 Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of National CineMedia i.e., National CineMedia and Fomento Economico go up and down completely randomly.
Pair Corralation between National CineMedia and Fomento Economico
Given the investment horizon of 90 days National CineMedia is expected to generate 2.05 times more return on investment than Fomento Economico. However, National CineMedia is 2.05 times more volatile than Fomento Economico Mexicano. It trades about 0.11 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about -0.12 per unit of risk. If you would invest 509.00 in National CineMedia on September 3, 2024 and sell it today you would earn a total of 221.00 from holding National CineMedia or generate 43.42% 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. Fomento Economico Mexicano
Performance |
| Timeline |
| National CineMedia |
| Fomento Economico |
National CineMedia and Fomento Economico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Fomento Economico
The main advantage of trading using opposite National CineMedia and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, Fomento Economico 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 Fomento Economico will offset losses from the drop in Fomento Economico'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 |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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