Correlation Between Disney and Capital Group
Can any of the company-specific risk be diversified away by investing in both Disney and Capital 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 Capital 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 Capital Group Core, you can compare the effects of market volatilities on Disney and Capital 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Capital Group.
Diversification Opportunities for Disney and Capital Group
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Disney and Capital is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Capital Group Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Core 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 Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Core has no effect on the direction of Disney i.e., Disney and Capital Group go up and down completely randomly.
Pair Corralation between Disney and Capital Group
Considering the 90-day investment horizon Walt Disney is expected to generate 5.06 times more return on investment than Capital Group. However, Disney is 5.06 times more volatile than Capital Group Core. It trades about 0.02 of its potential returns per unit of risk. Capital Group Core is currently generating about 0.07 per unit of risk. If you would invest 11,107 in Walt Disney on August 27, 2024 and sell it today you would earn a total of 458.00 from holding Walt Disney or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. Capital Group Core
Performance |
| Timeline |
| Walt Disney |
| Capital Group Core |
Disney and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Capital Group
The main advantage of trading using opposite Disney and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Capital 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 Capital Group will offset losses from the drop in Capital Group's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| Capital Group vs. First Trust Low | Capital Group vs. First Trust Enhanced | Capital Group vs. First Trust Tactical | Capital Group vs. First Trust Managed |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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