Correlation Between National CineMedia and UNITED

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

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

Diversification Opportunities for National CineMedia and UNITED

0.34

Correlation Coefficient

National CineMedia  UNITED

Weak diversification

The 3 months correlation between National and UNITED is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and UNITED TECHNOLOGIES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED 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 UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED TECHNOLOGIES has no effect on the direction of National CineMedia i.e., National CineMedia and UNITED go up and down completely randomly.

Pair Corralation between National CineMedia and UNITED

Given the investment horizon of 90 days National CineMedia is expected to under-perform the UNITED. But the stock apears to be less risky and, when comparing its historical volatility, National CineMedia is 2.04 times less risky than UNITED. The stock trades about -0.45 of its potential returns per unit of risk. The UNITED TECHNOLOGIES P is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  10,305  in UNITED TECHNOLOGIES P on October 12, 2024 and sell it today you would lose (232.00) from holding UNITED TECHNOLOGIES P or give up 2.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	70.0%
Values	Daily Returns

National CineMedia  vs.  UNITED TECHNOLOGIES P

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.

UNITED TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED TECHNOLOGIES P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent 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 UNITED TECHNOLOGIES P investors.

Pair Trading with National CineMedia and UNITED

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

The idea behind National CineMedia and UNITED TECHNOLOGIES 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.