Correlation Between Stepstone and National CineMedia
Can any of the company-specific risk be diversified away by investing in both Stepstone 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 Stepstone and National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and National CineMedia, you can compare the effects of market volatilities on Stepstone 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 Stepstone with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and National CineMedia.
Diversification Opportunities for Stepstone and National CineMedia
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stepstone and National is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and Stepstone 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 Stepstone Group 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 Stepstone i.e., Stepstone and National CineMedia go up and down completely randomly.
Pair Corralation between Stepstone and National CineMedia
Given the investment horizon of 90 days Stepstone Group is expected to generate 0.99 times more return on investment than National CineMedia. However, Stepstone Group is 1.01 times less risky than National CineMedia. It trades about 0.19 of its potential returns per unit of risk. National CineMedia is currently generating about -0.02 per unit of risk. If you would invest 5,901 in Stepstone Group on September 3, 2024 and sell it today you would earn a total of 688.00 from holding Stepstone Group or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. National CineMedia
Performance |
| Timeline |
| Stepstone Group |
| National CineMedia |
Stepstone and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and National CineMedia
The main advantage of trading using opposite Stepstone and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone 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.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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