Correlation Between FREEPORT and National CineMedia

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

By analyzing existing cross correlation between FREEPORT MCMORAN INC 525 and National CineMedia, you can compare the effects of market volatilities on FREEPORT and National CineMedia 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 FREEPORT with a short position of National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of FREEPORT and National CineMedia.

Diversification Opportunities for FREEPORT and National CineMedia

-0.26

Correlation Coefficient

FREEPORT  National CineMedia

Very good diversification

The 3 months correlation between FREEPORT and National is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding FREEPORT MCMORAN INC 525 and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia and FREEPORT 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 FREEPORT MCMORAN INC 525 are associated (or correlated) with National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of FREEPORT i.e., FREEPORT and National CineMedia go up and down completely randomly.

Pair Corralation between FREEPORT and National CineMedia

Assuming the 90 days trading horizon FREEPORT MCMORAN INC 525 is expected to under-perform the National CineMedia. But the bond apears to be less risky and, when comparing its historical volatility, FREEPORT MCMORAN INC 525 is 5.35 times less risky than National CineMedia. The bond trades about -0.08 of its potential returns per unit of risk. The National CineMedia is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  694.00  in National CineMedia on September 21, 2024 and sell it today you would lose (20.00) from holding National CineMedia or give up 2.88% of portfolio value over 90 days.

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

FREEPORT MCMORAN INC 525  vs.  National CineMedia

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 525 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 latest stock price disturbance, may contribute to short-term losses for the investors.

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 current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with FREEPORT and National CineMedia

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

The idea behind FREEPORT MCMORAN INC 525 and National CineMedia 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.