Correlation Between Live Nation and Amc Entertainment

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

Diversification Opportunities for Live Nation and Amc Entertainment

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Live Nation and Amc Entertainment is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Amc Entertainment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amc Entertainment and Live Nation 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 Live Nation Entertainment are associated (or correlated) with Amc Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amc Entertainment has no effect on the direction of Live Nation i.e., Live Nation and Amc Entertainment go up and down completely randomly.

Pair Corralation between Live Nation and Amc Entertainment

Considering the 90-day investment horizon Live Nation is expected to generate 32.1 times less return on investment than Amc Entertainment. But when comparing it to its historical volatility, Live Nation Entertainment is 6.17 times less risky than Amc Entertainment. It trades about 0.01 of its potential returns per unit of risk. Amc Entertainment Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  219.00  in Amc Entertainment Holdings on August 28, 2022 and sell it today you would earn a total of  532.00  from holding Amc Entertainment Holdings or generate 242.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

Live Nation Entertainment  vs.  Amc Entertainment Holdings

 Performance (%) 
       Timeline  
Live Nation Entertainment 
Live Nation Performance
0 of 100
Over the last 90 days Live Nation Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2022. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Live Nation Price Channel

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 latest fragile performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Amc Entertainment Price Channel

Live Nation and Amc Entertainment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Live Nation and Amc Entertainment

The main advantage of trading using opposite Live Nation and Amc Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Amc Entertainment 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 Entertainment will offset losses from the drop in Amc Entertainment's long position.
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The idea behind Live Nation Entertainment and Amc Entertainment 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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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