Correlation Between AMC Networks and Keurig

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

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

Diversification Opportunities for AMC Networks and Keurig

-0.45

Correlation Coefficient

AMC Networks  Keurig

Very good diversification

The 3 months correlation between AMC and Keurig is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding AMC Networks and Keurig Dr Pepper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keurig Dr Pepper and AMC Networks 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 Networks are associated (or correlated) with Keurig. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keurig Dr Pepper has no effect on the direction of AMC Networks i.e., AMC Networks and Keurig go up and down completely randomly.

Pair Corralation between AMC Networks and Keurig

Given the investment horizon of 90 days AMC Networks is expected to generate 11.78 times more return on investment than Keurig. However, AMC Networks is 11.78 times more volatile than Keurig Dr Pepper. It trades about 0.06 of its potential returns per unit of risk. Keurig Dr Pepper is currently generating about -0.19 per unit of risk. If you would invest  869.00  in AMC Networks on September 28, 2024 and sell it today you would earn a total of  86.00  from holding AMC Networks or generate 9.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

AMC Networks  vs.  Keurig Dr Pepper

AMC Networks

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AMC Networks are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, AMC Networks may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Keurig Dr Pepper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Keurig Dr Pepper has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Keurig is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AMC Networks and Keurig

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

The idea behind AMC Networks and Keurig Dr Pepper 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.