Correlation Between Everus Construction and National CineMedia

Can any of the company-specific risk be diversified away by investing in both Everus Construction 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 Everus Construction and National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Everus Construction Group and National CineMedia, you can compare the effects of market volatilities on Everus Construction 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 Everus Construction with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everus Construction and National CineMedia.

Diversification Opportunities for Everus Construction and National CineMedia

-0.17

Correlation Coefficient

Everus Construction  National CineMedia

Good diversification

The 3 months correlation between Everus and National is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Everus Construction Group and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and Everus Construction 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 Everus Construction 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 Everus Construction i.e., Everus Construction and National CineMedia go up and down completely randomly.

Pair Corralation between Everus Construction and National CineMedia

Considering the 90-day investment horizon Everus Construction is expected to generate 2.62 times less return on investment than National CineMedia. In addition to that, Everus Construction is 1.67 times more volatile than National CineMedia. It trades about 0.07 of its total potential returns per unit of risk. National CineMedia is currently generating about 0.31 per unit of volatility. If you would invest  652.00  in National CineMedia on September 12, 2024 and sell it today you would earn a total of  82.00  from holding National CineMedia or generate 12.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Everus Construction Group  vs.  National CineMedia

Everus Construction

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everus Construction Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Everus Construction reported solid returns over the last few months and may actually be approaching a breakup point.

National CineMedia

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National CineMedia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting primary indicators, National CineMedia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Everus Construction and National CineMedia

The main advantage of trading using opposite Everus Construction and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everus Construction 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.

The idea behind Everus Construction Group and National CineMedia 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.