Correlation Between Disney and AMC Entertainment
Can any of the company-specific risk be diversified away by investing in both Disney 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 Disney and AMC Entertainment 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 Entertainment Holdings, you can compare the effects of market volatilities on Disney 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 Disney with a short position of AMC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and AMC Entertainment.
Diversification Opportunities for Disney and AMC Entertainment
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Disney and AMC is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and AMC Entertainment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Entertainment 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 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 Disney i.e., Disney and AMC Entertainment go up and down completely randomly.
Pair Corralation between Disney and AMC Entertainment
Considering the 90-day investment horizon Walt Disney is expected to generate 0.36 times more return on investment than AMC Entertainment. However, Walt Disney is 2.79 times less risky than AMC Entertainment. It trades about 0.16 of its potential returns per unit of risk. AMC Entertainment Holdings is currently generating about -0.03 per unit of risk. If you would invest 9,350 in Walt Disney on January 24, 2024 and sell it today you would earn a total of 1,849 from holding Walt Disney or generate 19.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Walt Disney vs. AMC Entertainment Holdings
Performance |
Timeline |
Walt Disney |
AMC Entertainment |
Disney and AMC Entertainment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Disney and AMC Entertainment
The main advantage of trading using opposite Disney and AMC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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.The idea behind Walt Disney and AMC Entertainment Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data |