Correlation Between National CineMedia and Reservoir Media
Can any of the company-specific risk be diversified away by investing in both National CineMedia and Reservoir Media 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 Reservoir Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Reservoir Media, you can compare the effects of market volatilities on National CineMedia and Reservoir Media 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 Reservoir Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Reservoir Media.
Diversification Opportunities for National CineMedia and Reservoir Media
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Reservoir is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Reservoir Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reservoir Media 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 Reservoir Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reservoir Media has no effect on the direction of National CineMedia i.e., National CineMedia and Reservoir Media go up and down completely randomly.
Pair Corralation between National CineMedia and Reservoir Media
Given the investment horizon of 90 days National CineMedia is expected to generate 1.27 times more return on investment than Reservoir Media. However, National CineMedia is 1.27 times more volatile than Reservoir Media. It trades about 0.07 of its potential returns per unit of risk. Reservoir Media is currently generating about 0.06 per unit of risk. If you would invest 553.00 in National CineMedia on August 30, 2024 and sell it today you would earn a total of 133.00 from holding National CineMedia or generate 24.05% 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. Reservoir Media
Performance |
| Timeline |
| National CineMedia |
| Reservoir Media |
National CineMedia and Reservoir Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Reservoir Media
The main advantage of trading using opposite National CineMedia and Reservoir Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, Reservoir Media 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 Reservoir Media will offset losses from the drop in Reservoir Media's long position.| National CineMedia vs. Mirriad Advertising plc | National CineMedia vs. INEO Tech Corp | National CineMedia vs. Kidoz Inc | National CineMedia vs. Marchex |
| Reservoir Media vs. Reading International | Reservoir Media vs. Marcus | Reservoir Media vs. Gaia Inc | Reservoir Media vs. News Corp B |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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