Correlation Between United States and National CineMedia
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and National CineMedia, you can compare the effects of market volatilities on United States 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 United States with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and National CineMedia.
Diversification Opportunities for United States and National CineMedia
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and National is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and United States 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 United States Steel 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 United States i.e., United States and National CineMedia go up and down completely randomly.
Pair Corralation between United States and National CineMedia
Taking into account the 90-day investment horizon United States is expected to generate 2.42 times less return on investment than National CineMedia. In addition to that, United States is 1.28 times more volatile than National CineMedia. It trades about 0.02 of its total potential returns per unit of risk. National CineMedia is currently generating about 0.07 per unit of volatility. If you would invest 673.00 in National CineMedia on September 12, 2024 and sell it today you would earn a total of 61.00 from holding National CineMedia or generate 9.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. National CineMedia
Performance |
| Timeline |
| United States Steel |
| National CineMedia |
United States and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and National CineMedia
The main advantage of trading using opposite United States and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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