Correlation Between Alibaba Group and Walt Disney
Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Walt Disney 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 Alibaba Group and Walt Disney into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and Walt Disney, you can compare the effects of market volatilities on Alibaba Group and Walt Disney 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 Alibaba Group with a short position of Walt Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Walt Disney.
Diversification Opportunities for Alibaba Group and Walt Disney
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alibaba and Walt is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Alibaba Group 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 Alibaba Group Holding are associated (or correlated) with Walt Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Alibaba Group i.e., Alibaba Group and Walt Disney go up and down completely randomly.
Pair Corralation between Alibaba Group and Walt Disney
Assuming the 90 days trading horizon Alibaba Group Holding is expected to generate 1.59 times more return on investment than Walt Disney. However, Alibaba Group is 1.59 times more volatile than Walt Disney. It trades about 0.14 of its potential returns per unit of risk. Walt Disney is currently generating about 0.0 per unit of risk. If you would invest 1,077,500 in Alibaba Group Holding on October 20, 2024 and sell it today you would earn a total of 52,500 from holding Alibaba Group Holding or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. Walt Disney
Performance |
| Timeline |
| Alibaba Group Holding |
| Walt Disney |
Alibaba Group and Walt Disney Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Walt Disney
The main advantage of trading using opposite Alibaba Group and Walt Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Walt Disney 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 Walt Disney will offset losses from the drop in Walt Disney's long position.| Alibaba Group vs. Amazon Inc | Alibaba Group vs. Compania de Transporte | Alibaba Group vs. Banco de Valores | Alibaba Group vs. Mirgor SA |
| Walt Disney vs. Walmart | Walt Disney vs. American Express Co | Walt Disney vs. QUALCOMM Incorporated | Walt Disney vs. United States Steel |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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