Correlation Between AMC Entertainment and Warner Music
Can any of the company-specific risk be diversified away by investing in both AMC Entertainment and Warner Music 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 Warner Music 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 Warner Music Group, you can compare the effects of market volatilities on AMC Entertainment and Warner Music 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 Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Entertainment and Warner Music.
Diversification Opportunities for AMC Entertainment and Warner Music
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AMC and Warner is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding AMC Entertainment Holdings and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group 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 Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of AMC Entertainment i.e., AMC Entertainment and Warner Music go up and down completely randomly.
Pair Corralation between AMC Entertainment and Warner Music
Considering the 90-day investment horizon AMC Entertainment Holdings is expected to generate 4.15 times more return on investment than Warner Music. However, AMC Entertainment is 4.15 times more volatile than Warner Music Group. It trades about 0.01 of its potential returns per unit of risk. Warner Music Group is currently generating about -0.01 per unit of risk. If you would invest 686.00 in AMC Entertainment Holdings on August 27, 2024 and sell it today you would lose (231.00) from holding AMC Entertainment Holdings or give up 33.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMC Entertainment Holdings vs. Warner Music Group
Performance |
| Timeline |
| AMC Entertainment |
| Warner Music Group |
AMC Entertainment and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMC Entertainment and Warner Music
The main advantage of trading using opposite AMC Entertainment and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMC Entertainment position performs unexpectedly, Warner Music 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 Warner Music will offset losses from the drop in Warner Music's long position.| AMC Entertainment vs. ADTRAN Inc | AMC Entertainment vs. Belden Inc | AMC Entertainment vs. ADC Therapeutics SA | AMC Entertainment vs. Comtech Telecommunications Corp |
| Warner Music vs. ADTRAN Inc | Warner Music vs. Belden Inc | Warner Music vs. ADC Therapeutics SA | Warner Music vs. Comtech Telecommunications Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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