Correlation Between National CineMedia and Everest

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

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

Diversification Opportunities for National CineMedia and Everest

-0.28

Correlation Coefficient

National CineMedia  Everest

Very good diversification

The 3 months correlation between National and Everest is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Everest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everest Group 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 Everest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everest Group has no effect on the direction of National CineMedia i.e., National CineMedia and Everest go up and down completely randomly.

Pair Corralation between National CineMedia and Everest

Given the investment horizon of 90 days National CineMedia is expected to generate 1.23 times more return on investment than Everest. However, National CineMedia is 1.23 times more volatile than Everest Group. It trades about 0.05 of its potential returns per unit of risk. Everest Group is currently generating about -0.05 per unit of risk. If you would invest  696.00  in National CineMedia on September 15, 2024 and sell it today you would earn a total of  41.00  from holding National CineMedia or generate 5.89% return on investment over 90 days.

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

National CineMedia  vs.  Everest Group

National CineMedia

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National CineMedia are ranked lower than 4 (%) 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.

Everest Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everest Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Everest is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with National CineMedia and Everest

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

The idea behind National CineMedia and Everest Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.