Correlation Between National CineMedia and Westrock Coffee

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

Diversification Opportunities for National CineMedia and Westrock Coffee

NationalWestrockDiversified AwayNationalWestrockDiversified Away100%
0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between National and Westrock is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of National CineMedia i.e., National CineMedia and Westrock Coffee go up and down completely randomly.

Pair Corralation between National CineMedia and Westrock Coffee

Given the investment horizon of 90 days National CineMedia is expected to generate 0.67 times more return on investment than Westrock Coffee. However, National CineMedia is 1.49 times less risky than Westrock Coffee. It trades about 0.05 of its potential returns per unit of risk. Westrock Coffee is currently generating about -0.16 per unit of risk. If you would invest  659.00  in National CineMedia on December 2, 2024 and sell it today you would earn a total of  10.00  from holding National CineMedia or generate 1.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

National CineMedia  vs.  Westrock Coffee

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-50510
JavaScript chart by amCharts 3.21.15NCMI WEST
       Timeline  
National CineMedia 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days National CineMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.
JavaScript chart by amCharts 3.21.15JanFebFebMar66.26.46.66.877.27.47.6
Westrock Coffee 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Westrock Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar66.577.58

National CineMedia and Westrock Coffee Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.87-5.15-3.42-1.70.01.723.455.176.9 0.020.030.040.050.060.070.08
JavaScript chart by amCharts 3.21.15NCMI WEST
       Returns  

Pair Trading with National CineMedia and Westrock Coffee

The main advantage of trading using opposite National CineMedia and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.
The idea behind National CineMedia and Westrock Coffee 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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