Correlation Between AMC Entertainment and Disney

Can any of the company-specific risk be diversified away by investing in both AMC Entertainment and Disney 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 AMC Entertainment and Disney into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMC Entertainment Holdings and Walt Disney, you can compare the effects of market volatilities on AMC Entertainment and Disney 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 AMC Entertainment with a short position of Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Entertainment and Disney.

Diversification Opportunities for AMC Entertainment and Disney

-0.36

Correlation Coefficient

AMC Entertainment  Disney

Very good diversification

The 3 months correlation between AMC and Disney is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding AMC Entertainment Holdings and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and AMC Entertainment 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 AMC Entertainment Holdings are associated (or correlated) with Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of AMC Entertainment i.e., AMC Entertainment and Disney go up and down completely randomly.

Pair Corralation between AMC Entertainment and Disney

Considering the 90-day investment horizon AMC Entertainment Holdings is expected to under-perform the Disney. In addition to that, AMC Entertainment is 5.11 times more volatile than Walt Disney. It trades about -0.05 of its total potential returns per unit of risk. Walt Disney is currently generating about 0.04 per unit of volatility. If you would invest  9,152  in Walt Disney on February 15, 2024 and sell it today you would earn a total of  1,383  from holding Walt Disney or generate 15.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AMC Entertainment Holdings  vs.  Walt Disney

AMC Entertainment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AMC Entertainment Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, AMC Entertainment exhibited solid returns over the last few months and may actually be approaching a breakup point.

Walt Disney

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Disney is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AMC Entertainment and Disney

The main advantage of trading using opposite AMC Entertainment and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMC Entertainment position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.

The idea behind AMC Entertainment Holdings and Walt Disney 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.