Correlation Between AMC Entertainment and Sirius XM

Can any of the company-specific risk be diversified away by investing in both AMC Entertainment and Sirius XM 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 Sirius XM 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 Sirius XM Holding, you can compare the effects of market volatilities on AMC Entertainment and Sirius XM 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 Sirius XM. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMC Entertainment and Sirius XM.

Diversification Opportunities for AMC Entertainment and Sirius XM

0.77

Correlation Coefficient

AMC Entertainment  Sirius XM

Poor diversification

The 3 months correlation between AMC and Sirius is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AMC Entertainment Holdings and Sirius XM Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius XM Holding 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 Sirius XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius XM Holding has no effect on the direction of AMC Entertainment i.e., AMC Entertainment and Sirius XM go up and down completely randomly.

Pair Corralation between AMC Entertainment and Sirius XM

Considering the 90-day investment horizon AMC Entertainment Holdings is expected to generate 2.01 times more return on investment than Sirius XM. However, AMC Entertainment is 2.01 times more volatile than Sirius XM Holding. It trades about 0.06 of its potential returns per unit of risk. Sirius XM Holding is currently generating about -0.19 per unit of risk. If you would invest  300.00  in AMC Entertainment Holdings on February 4, 2024 and sell it today you would earn a total of  13.00  from holding AMC Entertainment Holdings or generate 4.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

AMC Entertainment Holdings  vs.  Sirius XM Holding

AMC Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMC Entertainment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Sirius XM Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sirius XM Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with AMC Entertainment and Sirius XM

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

The idea behind AMC Entertainment Holdings and Sirius XM Holding 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.

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 the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.