Correlation Between Warner Music and AMC Preferred
Can any of the company-specific risk be diversified away by investing in both Warner Music 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 Warner Music and AMC Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warner Music Group and AMC Preferred Units, you can compare the effects of market volatilities on Warner Music 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 Warner Music with a short position of AMC Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and AMC Preferred.
Diversification Opportunities for Warner Music and AMC Preferred
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Warner and AMC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group 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 Warner Music 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 Warner Music Group 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 Warner Music i.e., Warner Music and AMC Preferred go up and down completely randomly.
Pair Corralation between Warner Music and AMC Preferred
If you would invest 2,886 in Warner Music Group on August 28, 2024 and sell it today you would earn a total of 319.00 from holding Warner Music Group or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 1.59% |
| Values | Daily Returns |
Warner Music Group vs. AMC Preferred Units
Performance |
| Timeline |
| Warner Music Group |
| AMC Preferred Units |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Warner Music and AMC Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and AMC Preferred
The main advantage of trading using opposite Warner Music and AMC Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music 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.| Warner Music vs. News Corp A | Warner Music vs. Marcus | Warner Music vs. Liberty Media | Warner Music vs. Fox Corp Class |
| AMC Preferred vs. Netflix | AMC Preferred vs. Walt Disney | AMC Preferred vs. Roku Inc | AMC Preferred 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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