Correlation Between National CineMedia and Mind Medicine

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

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

Diversification Opportunities for National CineMedia and Mind Medicine

0.69

Correlation Coefficient

National CineMedia  Mind Medicine

Poor diversification

The 3 months correlation between National and Mind is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Mind Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Medicine 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 Mind Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Medicine has no effect on the direction of National CineMedia i.e., National CineMedia and Mind Medicine go up and down completely randomly.

Pair Corralation between National CineMedia and Mind Medicine

Given the investment horizon of 90 days National CineMedia is expected to under-perform the Mind Medicine. But the stock apears to be less risky and, when comparing its historical volatility, National CineMedia is 1.63 times less risky than Mind Medicine. The stock trades about -0.05 of its potential returns per unit of risk. The Mind Medicine is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  670.00  in Mind Medicine on December 28, 2024 and sell it today you would lose (51.00) from holding Mind Medicine or give up 7.61% of portfolio value over 90 days.

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

National CineMedia  vs.  Mind Medicine

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 uncertain 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.

Mind Medicine

Risk-Adjusted Performance

Weak

Over the last 90 days Mind Medicine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Mind Medicine 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 Mind Medicine

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

The idea behind National CineMedia and Mind Medicine 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.