Correlation Between SL Green and National CineMedia
Can any of the company-specific risk be diversified away by investing in both SL Green and National CineMedia 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 SL Green and National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SL Green Realty and National CineMedia, you can compare the effects of market volatilities on SL Green and National CineMedia 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 SL Green with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and National CineMedia.
Diversification Opportunities for SL Green and National CineMedia
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SLG and National is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and SL Green 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 SL Green Realty are associated (or correlated) with National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of SL Green i.e., SL Green and National CineMedia go up and down completely randomly.
Pair Corralation between SL Green and National CineMedia
Considering the 90-day investment horizon SL Green Realty is expected to under-perform the National CineMedia. But the stock apears to be less risky and, when comparing its historical volatility, SL Green Realty is 1.14 times less risky than National CineMedia. The stock trades about -0.1 of its potential returns per unit of risk. The National CineMedia is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 666.00 in National CineMedia on September 14, 2024 and sell it today you would earn a total of 71.00 from holding National CineMedia or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SL Green Realty vs. National CineMedia
Performance |
| Timeline |
| SL Green Realty |
| National CineMedia |
SL Green and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and National CineMedia
The main advantage of trading using opposite SL Green and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, National CineMedia 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 National CineMedia will offset losses from the drop in National CineMedia's long position.| SL Green vs. Boston Properties | SL Green vs. Douglas Emmett | SL Green vs. Kilroy Realty Corp | SL Green vs. Alexandria Real Estate |
| National CineMedia vs. MGO Global Common | National CineMedia vs. Baosheng Media Group | National CineMedia vs. Glory Star New | National CineMedia vs. Impact Fusion International |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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