Correlation Between Western Digital and National CineMedia
Can any of the company-specific risk be diversified away by investing in both Western Digital 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 Western Digital and National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and National CineMedia, you can compare the effects of market volatilities on Western Digital 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 Western Digital with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and National CineMedia.
Diversification Opportunities for Western Digital and National CineMedia
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and National is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and Western Digital 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 Western Digital 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 Western Digital i.e., Western Digital and National CineMedia go up and down completely randomly.
Pair Corralation between Western Digital and National CineMedia
Considering the 90-day investment horizon Western Digital is expected to generate 17.16 times less return on investment than National CineMedia. But when comparing it to its historical volatility, Western Digital is 1.16 times less risky than National CineMedia. It trades about 0.01 of its potential returns per unit of risk. National CineMedia is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 553.00 in National CineMedia on September 1, 2024 and sell it today you would earn a total of 142.00 from holding National CineMedia or generate 25.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Digital vs. National CineMedia
Performance |
| Timeline |
| Western Digital |
| National CineMedia |
Western Digital and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and National CineMedia
The main advantage of trading using opposite Western Digital and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital 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.| Western Digital vs. Rigetti Computing | Western Digital vs. D Wave Quantum | Western Digital vs. IONQ Inc | Western Digital vs. Desktop Metal |
| National CineMedia vs. Mirriad Advertising plc | National CineMedia vs. INEO Tech Corp | National CineMedia vs. Kidoz Inc | National CineMedia vs. Marchex |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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