Correlation Between Gray Television and AMC Networks

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

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

Diversification Opportunities for Gray Television and AMC Networks

-0.54

Correlation Coefficient

Gray Television  AMC Networks

Excellent diversification

The 3 months correlation between Gray and AMC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gray Television and AMC Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Networks and Gray Television 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 Gray Television are associated (or correlated) with AMC Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Networks has no effect on the direction of Gray Television i.e., Gray Television and AMC Networks go up and down completely randomly.

Pair Corralation between Gray Television and AMC Networks

Considering the 90-day investment horizon Gray Television is expected to generate 1.23 times more return on investment than AMC Networks. However, Gray Television is 1.23 times more volatile than AMC Networks. It trades about 0.23 of its potential returns per unit of risk. AMC Networks is currently generating about -0.09 per unit of risk. If you would invest  399.00  in Gray Television on December 26, 2024 and sell it today you would earn a total of  76.00  from holding Gray Television or generate 19.05% return on investment over 90 days.

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

Gray Television  vs.  AMC Networks

Gray Television

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gray Television are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Gray Television displayed solid returns over the last few months and may actually be approaching a breakup point.

AMC Networks

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMC Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gray Television and AMC Networks

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

The idea behind Gray Television and AMC Networks 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.