Correlation Between Warner Bros and AMC Preferred

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

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

Diversification Opportunities for Warner Bros and AMC Preferred

0.0

Correlation Coefficient

Warner Bros  AMC Preferred

Pay attention - limited upside

The 3 months correlation between Warner and AMC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and AMC Preferred Units in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC Preferred Units and Warner Bros 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 Warner Bros Discovery are associated (or correlated) with AMC Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC Preferred Units has no effect on the direction of Warner Bros i.e., Warner Bros and AMC Preferred go up and down completely randomly.

Pair Corralation between Warner Bros and AMC Preferred

If you would invest  1,062  in Warner Bros Discovery on December 26, 2024 and sell it today you would earn a total of  41.00  from holding Warner Bros Discovery or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Warner Bros Discovery  vs.  AMC Preferred Units

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.

AMC Preferred Units

Risk-Adjusted Performance

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.

Pair Trading with Warner Bros and AMC Preferred

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

The idea behind Warner Bros Discovery and AMC Preferred Units 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.