Correlation Between Corning Incorporated and National CineMedia

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

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

Diversification Opportunities for Corning Incorporated and National CineMedia

0.41

Correlation Coefficient

Corning Incorporated  National CineMedia

Very weak diversification

The 3 months correlation between Corning and National is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Corning Incorporated and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and Corning Incorporated 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 Corning Incorporated 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 Corning Incorporated i.e., Corning Incorporated and National CineMedia go up and down completely randomly.

Pair Corralation between Corning Incorporated and National CineMedia

Considering the 90-day investment horizon Corning Incorporated is expected to generate 0.63 times more return on investment than National CineMedia. However, Corning Incorporated is 1.58 times less risky than National CineMedia. It trades about -0.09 of its potential returns per unit of risk. National CineMedia is currently generating about -0.19 per unit of risk. If you would invest  4,851  in Corning Incorporated on October 8, 2024 and sell it today you would lose (101.00) from holding Corning Incorporated or give up 2.08% of portfolio value over 90 days.

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

Corning Incorporated  vs.  National CineMedia

Corning Incorporated

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Corning Incorporated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

National CineMedia

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National CineMedia are ranked lower than 3 (%) 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 February 2025.

Pair Trading with Corning Incorporated and National CineMedia

The main advantage of trading using opposite Corning Incorporated and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corning Incorporated 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 Corning Incorporated 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.