Correlation Between Citigroup and AMC Entertainment

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

Diversification Opportunities for Citigroup and AMC Entertainment

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Citigroup and AMC is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and AMC Entertainment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Entertainment and Citigroup 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 Citigroup are associated (or correlated) with AMC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Entertainment has no effect on the direction of Citigroup i.e., Citigroup and AMC Entertainment go up and down completely randomly.

Pair Corralation between Citigroup and AMC Entertainment

Taking into account the 90-day investment horizon Citigroup is expected to generate 0.26 times more return on investment than AMC Entertainment. However, Citigroup is 3.79 times less risky than AMC Entertainment. It trades about 0.04 of its potential returns per unit of risk. AMC Entertainment Holdings is currently generating about -0.06 per unit of risk. If you would invest  4,829  in Citigroup on December 29, 2023 and sell it today you would earn a total of  1,446  from holding Citigroup or generate 29.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Citigroup  vs.  AMC Entertainment Holdings

 Performance 
       Timeline  
Citigroup 

Risk-Adjusted Performance

20 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.
AMC Entertainment 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days AMC Entertainment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Citigroup and AMC Entertainment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Citigroup and AMC Entertainment

The main advantage of trading using opposite Citigroup and AMC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, AMC Entertainment 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 AMC Entertainment will offset losses from the drop in AMC Entertainment's long position.
The idea behind Citigroup and AMC Entertainment Holdings 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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