Correlation Between National CineMedia and Pinterest
Can any of the company-specific risk be diversified away by investing in both National CineMedia and Pinterest 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 Pinterest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Pinterest, you can compare the effects of market volatilities on National CineMedia and Pinterest 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 Pinterest. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Pinterest.
Diversification Opportunities for National CineMedia and Pinterest
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Pinterest is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of National CineMedia i.e., National CineMedia and Pinterest go up and down completely randomly.
Pair Corralation between National CineMedia and Pinterest
Given the investment horizon of 90 days National CineMedia is expected to generate 1.2 times more return on investment than Pinterest. However, National CineMedia is 1.2 times more volatile than Pinterest. It trades about 0.09 of its potential returns per unit of risk. Pinterest is currently generating about -0.02 per unit of risk. If you would invest 375.00 in National CineMedia on November 3, 2024 and sell it today you would earn a total of 284.00 from holding National CineMedia or generate 75.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National CineMedia vs. Pinterest
Performance |
| Timeline |
| National CineMedia |
National CineMedia and Pinterest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Pinterest
The main advantage of trading using opposite National CineMedia and Pinterest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, Pinterest 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 Pinterest will offset losses from the drop in Pinterest'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 |
| Pinterest vs. Twilio Inc | Pinterest vs. Meta Platforms | Pinterest vs. Alphabet Inc Class C | Pinterest vs. Alphabet Inc Class A |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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