Correlation Between ADTRAN and AMC Entertainment
Can any of the company-specific risk be diversified away by investing in both ADTRAN 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 ADTRAN and AMC Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADTRAN Inc and AMC Entertainment Holdings, you can compare the effects of market volatilities on ADTRAN 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 ADTRAN with a short position of AMC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADTRAN and AMC Entertainment.
Diversification Opportunities for ADTRAN and AMC Entertainment
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ADTRAN and AMC is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding ADTRAN Inc and AMC Entertainment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Entertainment and ADTRAN 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 ADTRAN Inc 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 ADTRAN i.e., ADTRAN and AMC Entertainment go up and down completely randomly.
Pair Corralation between ADTRAN and AMC Entertainment
Given the investment horizon of 90 days ADTRAN Inc is expected to generate 0.49 times more return on investment than AMC Entertainment. However, ADTRAN Inc is 2.05 times less risky than AMC Entertainment. It trades about -0.03 of its potential returns per unit of risk. AMC Entertainment Holdings is currently generating about -0.03 per unit of risk. If you would invest 1,944 in ADTRAN Inc on August 30, 2024 and sell it today you would lose (1,105) from holding ADTRAN Inc or give up 56.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
ADTRAN Inc vs. AMC Entertainment Holdings
Performance |
| Timeline |
| ADTRAN Inc |
| AMC Entertainment |
ADTRAN and AMC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADTRAN and AMC Entertainment
The main advantage of trading using opposite ADTRAN and AMC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADTRAN 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.| ADTRAN vs. Mynaric AG ADR | ADTRAN vs. KVH Industries | ADTRAN vs. Telesat Corp | ADTRAN vs. Digi International |
| AMC Entertainment vs. Cinemark Holdings | AMC Entertainment vs. Roku Inc | AMC Entertainment vs. Netflix | 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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