Correlation Between AMC Entertainment and Warner Bros

Can any of the company-specific risk be diversified away by investing in both AMC Entertainment and Warner Bros 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 Warner Bros 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 Warner Bros Discovery, you can compare the effects of market volatilities on AMC Entertainment and Warner Bros 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 Warner Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Entertainment and Warner Bros.

Diversification Opportunities for AMC Entertainment and Warner Bros

-0.07

Correlation Coefficient

AMC Entertainment  Warner Bros

Good diversification

The 3 months correlation between AMC and Warner is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding AMC Entertainment Holdings and Warner Bros Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Bros Discovery 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 Warner Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Bros Discovery has no effect on the direction of AMC Entertainment i.e., AMC Entertainment and Warner Bros go up and down completely randomly.

Pair Corralation between AMC Entertainment and Warner Bros

Considering the 90-day investment horizon AMC Entertainment Holdings is expected to under-perform the Warner Bros. In addition to that, AMC Entertainment is 1.11 times more volatile than Warner Bros Discovery. It trades about -0.14 of its total potential returns per unit of risk. Warner Bros Discovery is currently generating about 0.04 per unit of volatility. If you would invest  1,061  in Warner Bros Discovery on December 27, 2024 and sell it today you would earn a total of  42.00  from holding Warner Bros Discovery or generate 3.96% 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.  Warner Bros Discovery

AMC Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMC Entertainment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Warner Bros Discovery

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Bros Discovery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Warner Bros is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AMC Entertainment and Warner Bros

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

The idea behind AMC Entertainment Holdings and Warner Bros Discovery 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.