Correlation Between American Films and Manchester United

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

By analyzing existing cross correlation between American Films and Manchester United, you can compare the effects of market volatilities on American Films and Manchester United 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 American Films with a short position of Manchester United. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Films and Manchester United.

Diversification Opportunities for American Films and Manchester United

-0.28

Correlation Coefficient

American Films  Manchester United

Very good diversification

The 3 months correlation between American and Manchester is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Films and Manchester United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manchester United and American Films 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 American Films are associated (or correlated) with Manchester United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manchester United has no effect on the direction of American Films i.e., American Films and Manchester United go up and down completely randomly.

Pair Corralation between American Films and Manchester United

Given the investment horizon of 90 days American Films is expected to generate 5.58 times more return on investment than Manchester United. However, American Films is 5.58 times more volatile than Manchester United. It trades about 0.05 of its potential returns per unit of risk. Manchester United is currently generating about 0.0 per unit of risk. If you would invest  56.00  in American Films on September 23, 2024 and sell it today you would lose (45.00) from holding American Films or give up 80.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

American Films  vs.  Manchester United

American Films

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Films are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, American Films disclosed solid returns over the last few months and may actually be approaching a breakup point.

Manchester United

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Manchester United are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Manchester United may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with American Films and Manchester United

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

The idea behind American Films and Manchester United 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.