Correlation Between Disney and Bridgetown Holdings
Can any of the company-specific risk be diversified away by investing in both Disney and Bridgetown Holdings 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 Bridgetown Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Bridgetown Holdings, you can compare the effects of market volatilities on Disney and Bridgetown Holdings 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 Bridgetown Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Bridgetown Holdings.
Diversification Opportunities for Disney and Bridgetown Holdings
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Disney and Bridgetown is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Bridgetown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgetown Holdings 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 Bridgetown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgetown Holdings has no effect on the direction of Disney i.e., Disney and Bridgetown Holdings go up and down completely randomly.
Pair Corralation between Disney and Bridgetown Holdings
Considering the 90-day investment horizon Disney is expected to generate 1.56 times less return on investment than Bridgetown Holdings. In addition to that, Disney is 13.3 times more volatile than Bridgetown Holdings. It trades about 0.01 of its total potential returns per unit of risk. Bridgetown Holdings is currently generating about 0.21 per unit of volatility. If you would invest 1,000.00 in Bridgetown Holdings on October 25, 2024 and sell it today you would earn a total of 30.00 from holding Bridgetown Holdings or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 23.89% |
| Values | Daily Returns |
Walt Disney vs. Bridgetown Holdings
Performance |
| Timeline |
| Walt Disney |
| Bridgetown Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Disney and Bridgetown Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Bridgetown Holdings
The main advantage of trading using opposite Disney and Bridgetown Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Bridgetown Holdings 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 Bridgetown Holdings will offset losses from the drop in Bridgetown Holdings' 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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