Correlation Between National CineMedia and SHERWIN

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Can any of the company-specific risk be diversified away by investing in both National CineMedia and SHERWIN 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 SHERWIN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and SHERWIN WILLIAMS 33 percent, you can compare the effects of market volatilities on National CineMedia and SHERWIN 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 SHERWIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and SHERWIN.

Diversification Opportunities for National CineMedia and SHERWIN

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between National and SHERWIN is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and SHERWIN WILLIAMS 33 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHERWIN WILLIAMS 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 SHERWIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHERWIN WILLIAMS has no effect on the direction of National CineMedia i.e., National CineMedia and SHERWIN go up and down completely randomly.

Pair Corralation between National CineMedia and SHERWIN

Given the investment horizon of 90 days National CineMedia is expected to generate 14.38 times more return on investment than SHERWIN. However, National CineMedia is 14.38 times more volatile than SHERWIN WILLIAMS 33 percent. It trades about 0.34 of its potential returns per unit of risk. SHERWIN WILLIAMS 33 percent is currently generating about 0.14 per unit of risk. If you would invest  652.00  in National CineMedia on September 12, 2024 and sell it today you would earn a total of  93.00  from holding National CineMedia or generate 14.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy63.64%
ValuesDaily Returns

National CineMedia  vs.  SHERWIN WILLIAMS 33 percent

 Performance 
       Timeline  
National CineMedia 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in National CineMedia are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting primary indicators, National CineMedia may actually be approaching a critical reversion point that can send shares even higher in January 2025.
SHERWIN WILLIAMS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SHERWIN WILLIAMS 33 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SHERWIN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

National CineMedia and SHERWIN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with National CineMedia and SHERWIN

The main advantage of trading using opposite National CineMedia and SHERWIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, SHERWIN 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 SHERWIN will offset losses from the drop in SHERWIN's long position.
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The idea behind National CineMedia and SHERWIN WILLIAMS 33 percent pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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