Correlation Between National CineMedia and MYT Netherlands

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

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

Diversification Opportunities for National CineMedia and MYT Netherlands

-0.01

Correlation Coefficient

National CineMedia  MYT Netherlands

Good diversification

The 3 months correlation between National and MYT is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and MYT Netherlands Parent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYT Netherlands Parent 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 MYT Netherlands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYT Netherlands Parent has no effect on the direction of National CineMedia i.e., National CineMedia and MYT Netherlands go up and down completely randomly.

Pair Corralation between National CineMedia and MYT Netherlands

Given the investment horizon of 90 days National CineMedia is expected to generate 3.04 times less return on investment than MYT Netherlands. But when comparing it to its historical volatility, National CineMedia is 1.76 times less risky than MYT Netherlands. It trades about 0.06 of its potential returns per unit of risk. MYT Netherlands Parent is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  230.00  in MYT Netherlands Parent on October 11, 2024 and sell it today you would earn a total of  517.00  from holding MYT Netherlands Parent or generate 224.78% 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.  MYT Netherlands Parent

National CineMedia

Risk-Adjusted Performance

0 of 100

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 conflicting 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.

MYT Netherlands Parent

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with National CineMedia and MYT Netherlands

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

The idea behind National CineMedia and MYT Netherlands Parent 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.