Correlation Between Disney and Global X
Can any of the company-specific risk be diversified away by investing in both Disney and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Global X MSCI, you can compare the effects of market volatilities on Disney and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Global X.
Diversification Opportunities for Disney and Global X
Poor diversification
The 3 months correlation between Disney and Global is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of Disney i.e., Disney and Global X go up and down completely randomly.
Pair Corralation between Disney and Global X
Considering the 90-day investment horizon Disney is expected to generate 2.44 times less return on investment than Global X. But when comparing it to its historical volatility, Walt Disney is 1.09 times less risky than Global X. It trades about 0.05 of its potential returns per unit of risk. Global X MSCI is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,230 in Global X MSCI on September 1, 2024 and sell it today you would earn a total of 4,122 from holding Global X MSCI or generate 97.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Walt Disney vs. Global X MSCI
Performance |
| Timeline |
| Walt Disney |
| Global X MSCI |
Disney and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Global X
The main advantage of trading using opposite Disney and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Disney vs. ADTRAN Inc | Disney vs. Belden Inc | Disney vs. ADC Therapeutics SA | Disney vs. Comtech Telecommunications Corp |
| Global X vs. Global X MSCI | Global X vs. iShares MSCI Peru | Global X vs. iShares MSCI Chile | Global X vs. Global X MSCI |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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