Correlation Between National CineMedia and Balance Labs

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

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

Diversification Opportunities for National CineMedia and Balance Labs

0.0

Correlation Coefficient

National CineMedia  Balance Labs

Pay attention - limited upside

The 3 months correlation between National and Balance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Balance Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balance Labs and National CineMedia 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 National CineMedia are associated (or correlated) with Balance Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balance Labs has no effect on the direction of National CineMedia i.e., National CineMedia and Balance Labs go up and down completely randomly.

Pair Corralation between National CineMedia and Balance Labs

If you would invest  696.00  in National CineMedia on September 16, 2024 and sell it today you would earn a total of  28.00  from holding National CineMedia or generate 4.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

National CineMedia  vs.  Balance Labs

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 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.

Balance Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Balance Labs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Balance Labs is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with National CineMedia and Balance Labs

The main advantage of trading using opposite National CineMedia and Balance Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, Balance Labs 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 Balance Labs will offset losses from the drop in Balance Labs' long position.

The idea behind National CineMedia and Balance Labs 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.