Correlation Between National CineMedia and Interpublic Group

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

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

Diversification Opportunities for National CineMedia and Interpublic Group

0.42

Correlation Coefficient

National CineMedia  Interpublic Group

Very weak diversification

The 3 months correlation between National and Interpublic is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Interpublic Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interpublic 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 Interpublic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interpublic Group has no effect on the direction of National CineMedia i.e., National CineMedia and Interpublic Group go up and down completely randomly.

Pair Corralation between National CineMedia and Interpublic Group

Given the investment horizon of 90 days National CineMedia is expected to under-perform the Interpublic Group. In addition to that, National CineMedia is 2.44 times more volatile than Interpublic Group of. It trades about -0.05 of its total potential returns per unit of risk. Interpublic Group of is currently generating about -0.06 per unit of volatility. If you would invest  2,816  in Interpublic Group of on December 21, 2024 and sell it today you would lose (165.00) from holding Interpublic Group of or give up 5.86% of portfolio value over 90 days.

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

National CineMedia  vs.  Interpublic Group of

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.

Interpublic Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with National CineMedia and Interpublic Group

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

The idea behind National CineMedia and Interpublic Group of 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.