Correlation Between National CineMedia and Under Armour

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

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

Diversification Opportunities for National CineMedia and Under Armour

0.08

Correlation Coefficient

National CineMedia  Under Armour

Significant diversification

The 3 months correlation between National and Under is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Under Armour C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Under Armour C 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 Under Armour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Under Armour C has no effect on the direction of National CineMedia i.e., National CineMedia and Under Armour go up and down completely randomly.

Pair Corralation between National CineMedia and Under Armour

Given the investment horizon of 90 days National CineMedia is expected to generate 0.6 times more return on investment than Under Armour. However, National CineMedia is 1.66 times less risky than Under Armour. It trades about 0.02 of its potential returns per unit of risk. Under Armour C is currently generating about -0.07 per unit of risk. If you would invest  669.00  in National CineMedia on September 21, 2024 and sell it today you would earn a total of  3.00  from holding National CineMedia or generate 0.45% return on investment over 90 days.

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

National CineMedia  vs.  Under Armour C

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.

Under Armour C

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Under Armour C are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Under Armour may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with National CineMedia and Under Armour

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

The idea behind National CineMedia and Under Armour C 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.