Correlation Between Disney and AMC Networks
Can any of the company-specific risk be diversified away by investing in both Disney 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 Disney and AMC Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and AMC Networks, you can compare the effects of market volatilities on Disney 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 Disney with a short position of AMC Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and AMC Networks.
Diversification Opportunities for Disney and AMC Networks
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Disney and AMC is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and AMC Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Networks and Disney 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 Walt Disney 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 Disney i.e., Disney and AMC Networks go up and down completely randomly.
Pair Corralation between Disney and AMC Networks
Considering the 90-day investment horizon Walt Disney is expected to generate 0.38 times more return on investment than AMC Networks. However, Walt Disney is 2.64 times less risky than AMC Networks. It trades about 0.32 of its potential returns per unit of risk. AMC Networks is currently generating about 0.0 per unit of risk. If you would invest 8,913 in Walt Disney on August 31, 2024 and sell it today you would earn a total of 2,847 from holding Walt Disney or generate 31.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. AMC Networks
Performance |
| Timeline |
| Walt Disney |
| AMC Networks |
Disney and AMC Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and AMC Networks
The main advantage of trading using opposite Disney and AMC Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| AMC Networks vs. Nexstar Broadcasting Group | AMC Networks vs. News Corp B | AMC Networks vs. Fox Corp Class | AMC Networks vs. Liberty Media |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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