Correlation Between National CineMedia and SkyWest
Can any of the company-specific risk be diversified away by investing in both National CineMedia and SkyWest 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 SkyWest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and SkyWest, you can compare the effects of market volatilities on National CineMedia and SkyWest 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 SkyWest. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and SkyWest.
Diversification Opportunities for National CineMedia and SkyWest
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and SkyWest is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and SkyWest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkyWest 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 SkyWest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkyWest has no effect on the direction of National CineMedia i.e., National CineMedia and SkyWest go up and down completely randomly.
Pair Corralation between National CineMedia and SkyWest
Given the investment horizon of 90 days National CineMedia is expected to under-perform the SkyWest. In addition to that, National CineMedia is 1.16 times more volatile than SkyWest. It trades about -0.07 of its total potential returns per unit of risk. SkyWest is currently generating about 0.36 per unit of volatility. If you would invest 9,482 in SkyWest on August 28, 2024 and sell it today you would earn a total of 2,029 from holding SkyWest or generate 21.4% 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. SkyWest
Performance |
| Timeline |
| National CineMedia |
| SkyWest |
National CineMedia and SkyWest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and SkyWest
The main advantage of trading using opposite National CineMedia and SkyWest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, SkyWest 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 SkyWest will offset losses from the drop in SkyWest's long position.| National CineMedia vs. MGO Global Common | National CineMedia vs. Baosheng Media Group | National CineMedia vs. Impact Fusion International | National CineMedia vs. ZW Data Action |
| SkyWest vs. Copa Holdings SA | SkyWest vs. Sun Country Airlines | SkyWest vs. Air Transport Services | SkyWest vs. Frontier Group Holdings |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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