Correlation Between Paramount Global and AMC Entertainment
Can any of the company-specific risk be diversified away by investing in both Paramount Global 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 Paramount Global and AMC Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paramount Global Class and AMC Entertainment Holdings, you can compare the effects of market volatilities on Paramount Global 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 Paramount Global with a short position of AMC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Global and AMC Entertainment.
Diversification Opportunities for Paramount Global and AMC Entertainment
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Paramount and AMC is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global Class and AMC Entertainment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Entertainment and Paramount Global 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 Paramount Global Class 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 Paramount Global i.e., Paramount Global and AMC Entertainment go up and down completely randomly.
Pair Corralation between Paramount Global and AMC Entertainment
Given the investment horizon of 90 days Paramount Global Class is expected to generate 0.84 times more return on investment than AMC Entertainment. However, Paramount Global Class is 1.2 times less risky than AMC Entertainment. It trades about 0.0 of its potential returns per unit of risk. AMC Entertainment Holdings is currently generating about -0.06 per unit of risk. If you would invest 1,131 in Paramount Global Class on August 23, 2024 and sell it today you would lose (21.50) from holding Paramount Global Class or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paramount Global Class vs. AMC Entertainment Holdings
Performance |
| Timeline |
| Paramount Global Class |
| AMC Entertainment |
Paramount Global and AMC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Global and AMC Entertainment
The main advantage of trading using opposite Paramount Global and AMC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Global 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.| Paramount Global vs. Walt Disney | Paramount Global vs. Roku Inc | Paramount Global vs. Netflix | Paramount Global vs. AMC Entertainment 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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