Correlation Between AMC Entertainment and International Game
Can any of the company-specific risk be diversified away by investing in both AMC Entertainment and International Game 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 AMC Entertainment and International Game into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMC Entertainment Holdings and International Game Technology, you can compare the effects of market volatilities on AMC Entertainment and International Game 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 AMC Entertainment with a short position of International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Entertainment and International Game.
Diversification Opportunities for AMC Entertainment and International Game
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMC and International is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding AMC Entertainment Holdings and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game and AMC Entertainment 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 AMC Entertainment Holdings are associated (or correlated) with International Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Game has no effect on the direction of AMC Entertainment i.e., AMC Entertainment and International Game go up and down completely randomly.
Pair Corralation between AMC Entertainment and International Game
Considering the 90-day investment horizon AMC Entertainment Holdings is expected to under-perform the International Game. In addition to that, AMC Entertainment is 3.11 times more volatile than International Game Technology. It trades about -0.12 of its total potential returns per unit of risk. International Game Technology is currently generating about -0.07 per unit of volatility. If you would invest 3,074 in International Game Technology on January 24, 2024 and sell it today you would lose (1,031) from holding International Game Technology or give up 33.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMC Entertainment Holdings vs. International Game Technology
Performance |
| Timeline |
| AMC Entertainment |
| International Game |
AMC Entertainment and International Game Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMC Entertainment and International Game
The main advantage of trading using opposite AMC Entertainment and International Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMC Entertainment position performs unexpectedly, International Game 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 International Game will offset losses from the drop in International Game's long position.The idea behind AMC Entertainment Holdings and International Game Technology 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.| International Game vs. NeogamesSA | International Game vs. Accel Entertainment | International Game vs. PlayAGS | International Game vs. Everi Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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