Correlation Between State Street and AMC Entertainment
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and AMC Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Corp and AMC Entertainment Holdings, you can compare the effects of market volatilities on State Street 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 State Street with a short position of AMC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and AMC Entertainment.
Diversification Opportunities for State Street and AMC Entertainment
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between State and AMC is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding State Street Corp and AMC Entertainment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Entertainment and State Street 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 State Street Corp 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 State Street i.e., State Street and AMC Entertainment go up and down completely randomly.
Pair Corralation between State Street and AMC Entertainment
Considering the 90-day investment horizon State Street Corp is expected to generate 0.19 times more return on investment than AMC Entertainment. However, State Street Corp is 5.3 times less risky than AMC Entertainment. It trades about -0.05 of its potential returns per unit of risk. AMC Entertainment Holdings is currently generating about -0.12 per unit of risk. If you would invest 7,550 in State Street Corp on January 26, 2024 and sell it today you would lose (121.00) from holding State Street Corp or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Corp vs. AMC Entertainment Holdings
Performance |
| Timeline |
| State Street Corp |
| AMC Entertainment |
State Street and AMC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and AMC Entertainment
The main advantage of trading using opposite State Street and AMC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Invesco Plc | State Street vs. Franklin Resources | State Street vs. T Rowe Price | State Street vs. SEI Investments |
| AMC Entertainment vs. Roku Inc | AMC Entertainment vs. Paramount Global Class | AMC Entertainment vs. Warner Bros Discovery | AMC Entertainment vs. Paramount Global Class |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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