Correlation Between AMC Networks and International Paper
Can any of the company-specific risk be diversified away by investing in both AMC Networks and International Paper 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 Networks and International Paper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMC Networks and International Paper, you can compare the effects of market volatilities on AMC Networks and International Paper 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 Networks with a short position of International Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Networks and International Paper.
Diversification Opportunities for AMC Networks and International Paper
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AMC and International is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AMC Networks and International Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Paper and AMC Networks 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 Networks are associated (or correlated) with International Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Paper has no effect on the direction of AMC Networks i.e., AMC Networks and International Paper go up and down completely randomly.
Pair Corralation between AMC Networks and International Paper
Given the investment horizon of 90 days AMC Networks is expected to under-perform the International Paper. In addition to that, AMC Networks is 1.66 times more volatile than International Paper. It trades about -0.01 of its total potential returns per unit of risk. International Paper is currently generating about 0.01 per unit of volatility. If you would invest 7,700 in International Paper on September 26, 2024 and sell it today you would lose (100.00) from holding International Paper or give up 1.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 56.65% |
Values | Daily Returns |
AMC Networks vs. International Paper
Performance |
Timeline |
AMC Networks |
International Paper |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
AMC Networks and International Paper Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AMC Networks and International Paper
The main advantage of trading using opposite AMC Networks and International Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMC Networks position performs unexpectedly, International Paper 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 International Paper will offset losses from the drop in International Paper's long position.AMC Networks vs. Nexstar Broadcasting Group | AMC Networks vs. News Corp B | AMC Networks vs. Fox Corp Class | AMC Networks vs. Liberty Media |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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