Correlation Between National CineMedia and CONSOLIDATED

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

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

Diversification Opportunities for National CineMedia and CONSOLIDATED

0.25

Correlation Coefficient

National CineMedia  CONSOLIDATED

Modest diversification

The 3 months correlation between National and CONSOLIDATED is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and CONSOLIDATED EDISON N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON 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 CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON has no effect on the direction of National CineMedia i.e., National CineMedia and CONSOLIDATED go up and down completely randomly.

Pair Corralation between National CineMedia and CONSOLIDATED

Given the investment horizon of 90 days National CineMedia is expected to generate 2.76 times more return on investment than CONSOLIDATED. However, National CineMedia is 2.76 times more volatile than CONSOLIDATED EDISON N. It trades about 0.0 of its potential returns per unit of risk. CONSOLIDATED EDISON N is currently generating about -0.14 per unit of risk. If you would invest  651.00  in National CineMedia on October 10, 2024 and sell it today you would lose (9.00) from holding National CineMedia or give up 1.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	55.74%
Values	Daily Returns

National CineMedia  vs.  CONSOLIDATED EDISON N

National CineMedia

Risk-Adjusted Performance

0 of 100

Insignificant

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.

CONSOLIDATED EDISON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSOLIDATED EDISON N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONSOLIDATED EDISON N investors.

Pair Trading with National CineMedia and CONSOLIDATED

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

The idea behind National CineMedia and CONSOLIDATED EDISON N 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.