Correlation Between Reading International and AMC Preferred
Can any of the company-specific risk be diversified away by investing in both Reading International and AMC Preferred 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 Reading International and AMC Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reading International B and AMC Preferred Units, you can compare the effects of market volatilities on Reading International and AMC Preferred 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 Reading International with a short position of AMC Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reading International and AMC Preferred.
Diversification Opportunities for Reading International and AMC Preferred
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Reading and AMC is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Reading International B and AMC Preferred Units in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Preferred Units and Reading International 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 Reading International B are associated (or correlated) with AMC Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Preferred Units has no effect on the direction of Reading International i.e., Reading International and AMC Preferred go up and down completely randomly.
Pair Corralation between Reading International and AMC Preferred
Given the investment horizon of 90 days Reading International B is expected to under-perform the AMC Preferred. But the stock apears to be less risky and, when comparing its historical volatility, Reading International B is 2.0 times less risky than AMC Preferred. The stock trades about -0.03 of its potential returns per unit of risk. The AMC Preferred Units is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 81.00 in AMC Preferred Units on August 28, 2024 and sell it today you would earn a total of 99.00 from holding AMC Preferred Units or generate 122.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 32.37% |
| Values | Daily Returns |
Reading International B vs. AMC Preferred Units
Performance |
| Timeline |
| Reading International |
| AMC Preferred Units |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Reading International and AMC Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reading International and AMC Preferred
The main advantage of trading using opposite Reading International and AMC Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reading International position performs unexpectedly, AMC Preferred 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 Preferred will offset losses from the drop in AMC Preferred's long position.| Reading International vs. ADTRAN Inc | Reading International vs. Belden Inc | Reading International vs. ADC Therapeutics SA | Reading International vs. Comtech Telecommunications Corp |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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