Correlation Between Disney and Altitude Acquisition
Can any of the company-specific risk be diversified away by investing in both Disney and Altitude Acquisition 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 Disney and Altitude Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Altitude Acquisition Corp, you can compare the effects of market volatilities on Disney and Altitude Acquisition 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 Disney with a short position of Altitude Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Altitude Acquisition.
Diversification Opportunities for Disney and Altitude Acquisition
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Disney and Altitude is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Altitude Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altitude Acquisition Corp and Disney 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 Walt Disney are associated (or correlated) with Altitude Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altitude Acquisition Corp has no effect on the direction of Disney i.e., Disney and Altitude Acquisition go up and down completely randomly.
Pair Corralation between Disney and Altitude Acquisition
Considering the 90-day investment horizon Walt Disney is expected to generate 7.5 times more return on investment than Altitude Acquisition. However, Disney is 7.5 times more volatile than Altitude Acquisition Corp. It trades about 0.05 of its potential returns per unit of risk. Altitude Acquisition Corp is currently generating about -0.04 per unit of risk. If you would invest 9,181 in Walt Disney on August 31, 2024 and sell it today you would earn a total of 2,566 from holding Walt Disney or generate 27.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 8.56% |
| Values | Daily Returns |
Walt Disney vs. Altitude Acquisition Corp
Performance |
| Timeline |
| Walt Disney |
| Altitude Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Disney and Altitude Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Altitude Acquisition
The main advantage of trading using opposite Disney and Altitude Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Altitude Acquisition 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 Altitude Acquisition will offset losses from the drop in Altitude Acquisition's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
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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