Correlation Between Disney and Aristocrat Group
Can any of the company-specific risk be diversified away by investing in both Disney and Aristocrat Group 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 Aristocrat Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Aristocrat Group Corp, you can compare the effects of market volatilities on Disney and Aristocrat Group 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 Aristocrat Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Aristocrat Group.
Diversification Opportunities for Disney and Aristocrat Group
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Disney and Aristocrat is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Aristocrat Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Group 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 Aristocrat Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Group Corp has no effect on the direction of Disney i.e., Disney and Aristocrat Group go up and down completely randomly.
Pair Corralation between Disney and Aristocrat Group
Considering the 90-day investment horizon Walt Disney is expected to generate 0.46 times more return on investment than Aristocrat Group. However, Walt Disney is 2.18 times less risky than Aristocrat Group. It trades about 0.52 of its potential returns per unit of risk. Aristocrat Group Corp is currently generating about 0.03 per unit of risk. If you would invest 9,508 in Walt Disney on August 31, 2024 and sell it today you would earn a total of 2,239 from holding Walt Disney or generate 23.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Walt Disney vs. Aristocrat Group Corp
Performance |
| Timeline |
| Walt Disney |
| Aristocrat Group Corp |
Disney and Aristocrat Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Aristocrat Group
The main advantage of trading using opposite Disney and Aristocrat Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Aristocrat Group 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 Aristocrat Group will offset losses from the drop in Aristocrat Group's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| Aristocrat Group vs. Signet International Holdings | Aristocrat Group vs. National Beverage Corp | Aristocrat Group vs. PT Astra International | Aristocrat Group vs. Vita Coco |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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