Correlation Between National CineMedia and Coca Cola
Can any of the company-specific risk be diversified away by investing in both National CineMedia and Coca Cola 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 Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and The Coca Cola, you can compare the effects of market volatilities on National CineMedia and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Coca Cola.
Diversification Opportunities for National CineMedia and Coca Cola
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Coca is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of National CineMedia i.e., National CineMedia and Coca Cola go up and down completely randomly.
Pair Corralation between National CineMedia and Coca Cola
Given the investment horizon of 90 days National CineMedia is expected to generate 2.63 times more return on investment than Coca Cola. However, National CineMedia is 2.63 times more volatile than The Coca Cola. It trades about 0.03 of its potential returns per unit of risk. The Coca Cola is currently generating about -0.21 per unit of risk. If you would invest 674.00 in National CineMedia on September 3, 2024 and sell it today you would earn a total of 21.00 from holding National CineMedia or generate 3.12% 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. The Coca Cola
Performance |
| Timeline |
| National CineMedia |
| Coca Cola |
National CineMedia and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Coca Cola
The main advantage of trading using opposite National CineMedia and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola'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 |
| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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