Correlation Between AMC Entertainment and Reservoir Media
Can any of the company-specific risk be diversified away by investing in both AMC Entertainment and Reservoir Media 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 Reservoir Media 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 Reservoir Media, you can compare the effects of market volatilities on AMC Entertainment and Reservoir Media 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 Reservoir Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Entertainment and Reservoir Media.
Diversification Opportunities for AMC Entertainment and Reservoir Media
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AMC and Reservoir is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding AMC Entertainment Holdings and Reservoir Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reservoir Media 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 Reservoir Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reservoir Media has no effect on the direction of AMC Entertainment i.e., AMC Entertainment and Reservoir Media go up and down completely randomly.
Pair Corralation between AMC Entertainment and Reservoir Media
Considering the 90-day investment horizon AMC Entertainment is expected to generate 1.07 times less return on investment than Reservoir Media. In addition to that, AMC Entertainment is 1.21 times more volatile than Reservoir Media. It trades about 0.07 of its total potential returns per unit of risk. Reservoir Media is currently generating about 0.09 per unit of volatility. If you would invest 864.00 in Reservoir Media on August 23, 2024 and sell it today you would earn a total of 35.00 from holding Reservoir Media or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMC Entertainment Holdings vs. Reservoir Media
Performance |
| Timeline |
| AMC Entertainment |
| Reservoir Media |
AMC Entertainment and Reservoir Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMC Entertainment and Reservoir Media
The main advantage of trading using opposite AMC Entertainment and Reservoir Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMC Entertainment position performs unexpectedly, Reservoir Media 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 Reservoir Media will offset losses from the drop in Reservoir Media's long position.| AMC Entertainment vs. Cinemark Holdings | AMC Entertainment vs. Roku Inc | AMC Entertainment vs. Netflix | AMC Entertainment vs. Paramount Global Class |
| Reservoir Media vs. Roku Inc | Reservoir Media vs. AMC Entertainment Holdings | Reservoir Media vs. Paramount Global Class | Reservoir Media vs. Warner Bros Discovery |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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