Correlation Between National CineMedia and NOVARTIS

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

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

Diversification Opportunities for National CineMedia and NOVARTIS

0.11

Correlation Coefficient

National CineMedia  NOVARTIS

Average diversification

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

Pair Corralation between National CineMedia and NOVARTIS

Given the investment horizon of 90 days National CineMedia is expected to under-perform the NOVARTIS. In addition to that, National CineMedia is 10.07 times more volatile than NOVARTIS CAP P. It trades about -0.05 of its total potential returns per unit of risk. NOVARTIS CAP P is currently generating about 0.04 per unit of volatility. If you would invest  9,697  in NOVARTIS CAP P on December 30, 2024 and sell it today you would earn a total of  75.00  from holding NOVARTIS CAP P or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

National CineMedia  vs.  NOVARTIS CAP P

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 weak 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.

NOVARTIS CAP P

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NOVARTIS CAP P are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NOVARTIS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National CineMedia and NOVARTIS

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

The idea behind National CineMedia and NOVARTIS CAP P 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.