Correlation Between National CineMedia and Freeport

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

By analyzing existing cross correlation between National CineMedia and Freeport McMoRan 425 percent, you can compare the effects of market volatilities on National CineMedia and Freeport 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 Freeport. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Freeport.

Diversification Opportunities for National CineMedia and Freeport

0.05

Correlation Coefficient

National CineMedia  Freeport

Significant diversification

The 3 months correlation between National and Freeport is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Freeport McMoRan 425 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 425 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 Freeport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan 425 has no effect on the direction of National CineMedia i.e., National CineMedia and Freeport go up and down completely randomly.

Pair Corralation between National CineMedia and Freeport

Given the investment horizon of 90 days National CineMedia is expected to generate 10.46 times more return on investment than Freeport. However, National CineMedia is 10.46 times more volatile than Freeport McMoRan 425 percent. It trades about 0.05 of its potential returns per unit of risk. Freeport McMoRan 425 percent is currently generating about 0.0 per unit of risk. If you would invest  303.00  in National CineMedia on October 11, 2024 and sell it today you would earn a total of  320.00  from holding National CineMedia or generate 105.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.99%
Values	Daily Returns

National CineMedia  vs.  Freeport McMoRan 425 percent

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.

Freeport McMoRan 425

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan 425 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freeport is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National CineMedia and Freeport

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

The idea behind National CineMedia and Freeport McMoRan 425 percent 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.