Correlation Between National CineMedia and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both National CineMedia and Herc Holdings 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 Herc Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Herc Holdings, you can compare the effects of market volatilities on National CineMedia and Herc Holdings 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 Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Herc Holdings.
Diversification Opportunities for National CineMedia and Herc Holdings
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Herc is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings 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 Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of National CineMedia i.e., National CineMedia and Herc Holdings go up and down completely randomly.
Pair Corralation between National CineMedia and Herc Holdings
Given the investment horizon of 90 days National CineMedia is expected to generate 2.67 times more return on investment than Herc Holdings. However, National CineMedia is 2.67 times more volatile than Herc Holdings. It trades about 0.06 of its potential returns per unit of risk. Herc Holdings is currently generating about 0.05 per unit of risk. If you would invest 250.00 in National CineMedia on September 14, 2024 and sell it today you would earn a total of 480.00 from holding National CineMedia or generate 192.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
National CineMedia vs. Herc Holdings
Performance |
| Timeline |
| National CineMedia |
| Herc Holdings |
National CineMedia and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Herc Holdings
The main advantage of trading using opposite National CineMedia and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, Herc Holdings 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 Herc Holdings will offset losses from the drop in Herc Holdings' 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 |
| Herc Holdings vs. McGrath RentCorp | Herc Holdings vs. Alta Equipment Group | Herc Holdings vs. Custom Truck One | Herc Holdings vs. GATX Corporation |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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