Correlation Between Madison Square and AMC Entertainment
Can any of the company-specific risk be diversified away by investing in both Madison Square 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 Madison Square and AMC Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison Square Garden and AMC Entertainment Holdings, you can compare the effects of market volatilities on Madison Square 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 Madison Square with a short position of AMC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and AMC Entertainment.
Diversification Opportunities for Madison Square and AMC Entertainment
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Madison and AMC is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden and AMC Entertainment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Entertainment and Madison Square 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 Madison Square Garden 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 Madison Square i.e., Madison Square and AMC Entertainment go up and down completely randomly.
Pair Corralation between Madison Square and AMC Entertainment
Given the investment horizon of 90 days Madison Square Garden is expected to generate 0.19 times more return on investment than AMC Entertainment. However, Madison Square Garden is 5.2 times less risky than AMC Entertainment. It trades about 0.06 of its potential returns per unit of risk. AMC Entertainment Holdings is currently generating about -0.04 per unit of risk. If you would invest 16,206 in Madison Square Garden on August 27, 2024 and sell it today you would earn a total of 6,777 from holding Madison Square Garden or generate 41.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Square Garden vs. AMC Entertainment Holdings
Performance |
| Timeline |
| Madison Square Garden |
| AMC Entertainment |
Madison Square and AMC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Square and AMC Entertainment
The main advantage of trading using opposite Madison Square and AMC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square 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.| Madison Square vs. Atlanta Braves Holdings, | Madison Square vs. Liberty Media | Madison Square vs. Liberty Media | Madison Square vs. Atlanta Braves Holdings, |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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