Correlation Between National CineMedia and Impact Fusion

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

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

Diversification Opportunities for National CineMedia and Impact Fusion

-0.57

Correlation Coefficient

National CineMedia  Impact Fusion

Excellent diversification

The 3 months correlation between National and Impact is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Impact Fusion International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact Fusion Intern 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 Impact Fusion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact Fusion Intern has no effect on the direction of National CineMedia i.e., National CineMedia and Impact Fusion go up and down completely randomly.

Pair Corralation between National CineMedia and Impact Fusion

Given the investment horizon of 90 days National CineMedia is expected to under-perform the Impact Fusion. But the stock apears to be less risky and, when comparing its historical volatility, National CineMedia is 2.69 times less risky than Impact Fusion. The stock trades about -0.05 of its potential returns per unit of risk. The Impact Fusion International is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4.50  in Impact Fusion International on December 29, 2024 and sell it today you would earn a total of  5.50  from holding Impact Fusion International or generate 122.22% return on investment over 90 days.

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

National CineMedia  vs.  Impact Fusion International

National CineMedia

Risk-Adjusted Performance

Very Weak

Over the last 90 days National CineMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Impact Fusion Intern

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Impact Fusion International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Impact Fusion unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National CineMedia and Impact Fusion

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

The idea behind National CineMedia and Impact Fusion International 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 CEOs Directory module to screen CEOs from public companies around the world.