Correlation Between National CineMedia and Uber Technologies

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

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

Diversification Opportunities for National CineMedia and Uber Technologies

-0.11

Correlation Coefficient

National CineMedia  Uber Technologies

Good diversification

The 3 months correlation between National and Uber is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of National CineMedia i.e., National CineMedia and Uber Technologies go up and down completely randomly.

Pair Corralation between National CineMedia and Uber Technologies

Given the investment horizon of 90 days National CineMedia is expected to generate 0.84 times more return on investment than Uber Technologies. However, National CineMedia is 1.2 times less risky than Uber Technologies. It trades about -0.01 of its potential returns per unit of risk. Uber Technologies is currently generating about -0.1 per unit of risk. If you would invest  667.00  in National CineMedia on October 3, 2024 and sell it today you would lose (20.00) from holding National CineMedia or give up 3.0% of portfolio value over 90 days.

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

National CineMedia  vs.  Uber Technologies

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 fairly strong primary indicators, National CineMedia is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with National CineMedia and Uber Technologies

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

The idea behind National CineMedia and Uber Technologies 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.