Correlation Between AMC Preferred and Disney

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

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

Diversification Opportunities for AMC Preferred and Disney

0.87

Correlation Coefficient

AMC Preferred  Disney

Very poor diversification

The 3 months correlation between AMC and Disney is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding AMC Preferred Units and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and AMC Preferred 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 Preferred Units 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 Preferred i.e., AMC Preferred and Disney go up and down completely randomly.

Pair Corralation between AMC Preferred and Disney

If you would invest  8,913  in Walt Disney on September 3, 2024 and sell it today you would earn a total of  2,803  from holding Walt Disney or generate 31.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

AMC Preferred Units  vs.  Walt Disney

AMC Preferred Units

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMC Preferred Units has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AMC Preferred is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Walt Disney

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMC Preferred and Disney

The main advantage of trading using opposite AMC Preferred and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMC Preferred 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 Preferred Units 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.