Correlation Between Funko and National CineMedia

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

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

Diversification Opportunities for Funko and National CineMedia

0.15

Correlation Coefficient

Funko  National CineMedia

Average diversification

The 3 months correlation between Funko and National is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and Funko 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 Funko Inc 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 Funko i.e., Funko and National CineMedia go up and down completely randomly.

Pair Corralation between Funko and National CineMedia

Given the investment horizon of 90 days Funko Inc is expected to generate 1.24 times more return on investment than National CineMedia. However, Funko is 1.24 times more volatile than National CineMedia. It trades about 0.28 of its potential returns per unit of risk. National CineMedia is currently generating about 0.12 per unit of risk. If you would invest  1,031  in Funko Inc on September 17, 2024 and sell it today you would earn a total of  134.00  from holding Funko Inc or generate 13.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Funko Inc  vs.  National CineMedia

Funko Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking signals, Funko is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

National CineMedia

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days National CineMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, National CineMedia is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Funko and National CineMedia

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

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.