Correlation Between National CineMedia and Software Acquisition
Can any of the company-specific risk be diversified away by investing in both National CineMedia and Software Acquisition 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 Software Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Software Acquisition Group, you can compare the effects of market volatilities on National CineMedia and Software Acquisition 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 Software Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Software Acquisition.
Diversification Opportunities for National CineMedia and Software Acquisition
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Software is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Software Acquisition Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Software Acquisition 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 Software Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Software Acquisition has no effect on the direction of National CineMedia i.e., National CineMedia and Software Acquisition go up and down completely randomly.
Pair Corralation between National CineMedia and Software Acquisition
Given the investment horizon of 90 days National CineMedia is expected to generate 8.53 times less return on investment than Software Acquisition. But when comparing it to its historical volatility, National CineMedia is 18.5 times less risky than Software Acquisition. It trades about 0.31 of its potential returns per unit of risk. Software Acquisition Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Software Acquisition Group on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Software Acquisition Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
National CineMedia vs. Software Acquisition Group
Performance |
| Timeline |
| National CineMedia |
| Software Acquisition |
National CineMedia and Software Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Software Acquisition
The main advantage of trading using opposite National CineMedia and Software Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, Software Acquisition 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 Software Acquisition will offset losses from the drop in Software Acquisition'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 |
| Software Acquisition vs. National CineMedia | Software Acquisition vs. Baosheng Media Group | Software Acquisition vs. Townsquare Media | Software Acquisition vs. Dolphin Entertainment |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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