Correlation Between Amc Entertainment and Aarons Holdings

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Can any of the company-specific risk be diversified away by investing in both Amc Entertainment and Aarons Holdings 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 Entertainment and Aarons Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amc Entertainment Holdings and Aarons Holdings, you can compare the effects of market volatilities on Amc Entertainment and Aarons Holdings 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 Entertainment with a short position of Aarons Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amc Entertainment and Aarons Holdings.

Diversification Opportunities for Amc Entertainment and Aarons Holdings

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Amc Entertainment and Aarons is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Amc Entertainment Holdings and Aarons Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons Holdings and Amc Entertainment 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 Entertainment Holdings are associated (or correlated) with Aarons Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarons Holdings has no effect on the direction of Amc Entertainment i.e., Amc Entertainment and Aarons Holdings go up and down completely randomly.

Pair Corralation between Amc Entertainment and Aarons Holdings

Considering the 90-day investment horizon Amc Entertainment Holdings is expected to generate 2.29 times more return on investment than Aarons Holdings. However, Amc Entertainment is 2.29 times more volatile than Aarons Holdings. It trades about -0.12 of its potential returns per unit of risk. Aarons Holdings is currently generating about -0.33 per unit of risk. If you would invest  858.00  in Amc Entertainment Holdings on July 3, 2022 and sell it today you would lose (161.00)  from holding Amc Entertainment Holdings or give up 18.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Amc Entertainment Holdings  vs.  Aarons Holdings

 Performance (%) 
       Timeline  
Amc Entertainment 
Amc Entertainment Performance
0 of 100
Over the last 90 days Amc Entertainment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Amc Entertainment Price Channel

Aarons Holdings 
Aarons Performance
0 of 100
Over the last 90 days Aarons Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in November 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Aarons Price Channel

Amc Entertainment and Aarons Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amc Entertainment and Aarons Holdings

The main advantage of trading using opposite Amc Entertainment and Aarons Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amc Entertainment position performs unexpectedly, Aarons Holdings 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 Aarons Holdings will offset losses from the drop in Aarons Holdings' long position.
Amc Entertainment vs. Live Nation Entertainment
The idea behind Amc Entertainment Holdings and Aarons Holdings 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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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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