Correlation Between Sealed Air and National Cinemedia

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

Diversification Opportunities for Sealed Air and National Cinemedia

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Sealed and National is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and National Cinemedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Cinemedia and Sealed Air 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 Sealed Air Corp 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 Sealed Air i.e., Sealed Air and National Cinemedia go up and down completely randomly.

Pair Corralation between Sealed Air and National Cinemedia

Considering the 90-day investment horizon Sealed Air Corp is expected to generate 0.35 times more return on investment than National Cinemedia. However, Sealed Air Corp is 2.83 times less risky than National Cinemedia. It trades about 0.01 of its potential returns per unit of risk. National Cinemedia is currently generating about -0.03 per unit of risk. If you would invest  4,195  in Sealed Air Corp on July 1, 2022 and sell it today you would earn a total of  204.00  from holding Sealed Air Corp or generate 4.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Sealed Air Corp  vs.  National Cinemedia

 Performance (%) 
       Timeline  
Sealed Air Corp 
Sealed Performance
0 of 100
Over the last 90 days Sealed Air Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in October 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sealed Price Channel

National Cinemedia 
National Performance
0 of 100
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 stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

National Price Channel

Sealed Air and National Cinemedia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sealed Air and National Cinemedia

The main advantage of trading using opposite Sealed Air and National Cinemedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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.
Sealed Air vs. Amazon Inc
The idea behind Sealed Air Corp 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.
National Cinemedia vs. Amazon Inc
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 Transaction History module to view history of all your transactions and understand their impact on performance.

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