Correlation Between AMC Preferred and Netflix
Can any of the company-specific risk be diversified away by investing in both AMC Preferred and Netflix 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 Preferred and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMC Preferred Units and Netflix, you can compare the effects of market volatilities on AMC Preferred and Netflix 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 Preferred with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Preferred and Netflix.
Diversification Opportunities for AMC Preferred and Netflix
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AMC and Netflix is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding AMC Preferred Units and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and AMC Preferred 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 Preferred Units are associated (or correlated) with Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of AMC Preferred i.e., AMC Preferred and Netflix go up and down completely randomly.
Pair Corralation between AMC Preferred and Netflix
Considering the 90-day investment horizon AMC Preferred Units is expected to generate 1.16 times more return on investment than Netflix. However, AMC Preferred is 1.16 times more volatile than Netflix. It trades about 0.13 of its potential returns per unit of risk. Netflix is currently generating about 0.1 per unit of risk. If you would invest 173.00 in AMC Preferred Units on August 28, 2024 and sell it today you would earn a total of 7.00 from holding AMC Preferred Units or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 3.95% |
| Values | Daily Returns |
AMC Preferred Units vs. Netflix
Performance |
| Timeline |
| AMC Preferred Units |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Netflix |
AMC Preferred and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMC Preferred and Netflix
The main advantage of trading using opposite AMC Preferred and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMC Preferred position performs unexpectedly, Netflix 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 Netflix will offset losses from the drop in Netflix's long position.| AMC Preferred vs. Netflix | AMC Preferred vs. Walt Disney | AMC Preferred vs. Roku Inc | AMC Preferred vs. Paramount Global Class |
| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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