Correlation Between AMC Entertainment and AMC Networks
Can any of the company-specific risk be diversified away by investing in both AMC Entertainment and AMC Networks 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 AMC Networks 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 AMC Networks, you can compare the effects of market volatilities on AMC Entertainment and AMC Networks 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 AMC Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Entertainment and AMC Networks.
Diversification Opportunities for AMC Entertainment and AMC Networks
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AMC and AMC is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding AMC Entertainment Holdings and AMC Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Networks 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 AMC Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Networks has no effect on the direction of AMC Entertainment i.e., AMC Entertainment and AMC Networks go up and down completely randomly.
Pair Corralation between AMC Entertainment and AMC Networks
Considering the 90-day investment horizon AMC Entertainment Holdings is expected to under-perform the AMC Networks. In addition to that, AMC Entertainment is 2.02 times more volatile than AMC Networks. It trades about -0.36 of its total potential returns per unit of risk. AMC Networks is currently generating about -0.41 per unit of volatility. If you would invest 1,290 in AMC Networks on January 18, 2024 and sell it today you would lose (288.00) from holding AMC Networks or give up 22.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
AMC Entertainment Holdings vs. AMC Networks
Performance |
Timeline |
AMC Entertainment |
AMC Networks |
AMC Entertainment and AMC Networks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AMC Entertainment and AMC Networks
The main advantage of trading using opposite AMC Entertainment and AMC Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMC Entertainment position performs unexpectedly, AMC Networks 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 Networks will offset losses from the drop in AMC Networks' long position.The idea behind AMC Entertainment Holdings and AMC Networks 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.AMC Networks vs. Marchex | AMC Networks vs. Direct Digital Holdings | AMC Networks vs. Cimpress NV | AMC Networks vs. Emerald Expositions Events |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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