Correlation Between National CineMedia and BBB Foods
Can any of the company-specific risk be diversified away by investing in both National CineMedia and BBB Foods 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 BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and BBB Foods, you can compare the effects of market volatilities on National CineMedia and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and BBB Foods.
Diversification Opportunities for National CineMedia and BBB Foods
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and BBB is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of National CineMedia i.e., National CineMedia and BBB Foods go up and down completely randomly.
Pair Corralation between National CineMedia and BBB Foods
Given the investment horizon of 90 days National CineMedia is expected to generate 2.5 times more return on investment than BBB Foods. However, National CineMedia is 2.5 times more volatile than BBB Foods. It trades about 0.06 of its potential returns per unit of risk. BBB Foods is currently generating about 0.07 per unit of risk. If you would invest 226.00 in National CineMedia on November 27, 2024 and sell it today you would earn a total of 448.50 from holding National CineMedia or generate 198.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 52.83% |
| Values | Daily Returns |
National CineMedia vs. BBB Foods
Performance |
| Timeline |
| National CineMedia |
| BBB Foods |
National CineMedia and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and BBB Foods
The main advantage of trading using opposite National CineMedia and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' 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 |
| BBB Foods vs. LB Foster | BBB Foods vs. Eldorado Gold Corp | BBB Foods vs. ioneer Ltd American | BBB Foods vs. Sunlands Technology Group |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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