Correlation Between National CineMedia and BlackRock

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Can any of the company-specific risk be diversified away by investing in both National CineMedia and BlackRock 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 BlackRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and BlackRock, you can compare the effects of market volatilities on National CineMedia and BlackRock 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 BlackRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and BlackRock.

Diversification Opportunities for National CineMedia and BlackRock

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between National and BlackRock is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock 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 BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of National CineMedia i.e., National CineMedia and BlackRock go up and down completely randomly.

Pair Corralation between National CineMedia and BlackRock

Given the investment horizon of 90 days National CineMedia is expected to under-perform the BlackRock. In addition to that, National CineMedia is 4.64 times more volatile than BlackRock. It trades about 0.0 of its total potential returns per unit of risk. BlackRock is currently generating about 0.04 per unit of volatility. If you would invest  59,076  in BlackRock on January 22, 2024 and sell it today you would earn a total of  15,922  from holding BlackRock or generate 26.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

National CineMedia  vs.  BlackRock

 Performance 
       Timeline  
National CineMedia 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in National CineMedia are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting primary indicators, National CineMedia may actually be approaching a critical reversion point that can send shares even higher in May 2024.
BlackRock 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, BlackRock is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

National CineMedia and BlackRock Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with National CineMedia and BlackRock

The main advantage of trading using opposite National CineMedia and BlackRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia position performs unexpectedly, BlackRock 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 BlackRock will offset losses from the drop in BlackRock's long position.
The idea behind National CineMedia and BlackRock 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.
Check out your portfolio center.
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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