Correlation Between Disney and Capital Product
Can any of the company-specific risk be diversified away by investing in both Disney and Capital Product 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 Product 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 Product Partners, you can compare the effects of market volatilities on Disney and Capital Product 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 Product. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Capital Product.
Diversification Opportunities for Disney and Capital Product
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Disney and Capital is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Capital Product Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Product Partners 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 Product. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Product Partners has no effect on the direction of Disney i.e., Disney and Capital Product go up and down completely randomly.
Pair Corralation between Disney and Capital Product
Considering the 90-day investment horizon Walt Disney is expected to generate 0.11 times more return on investment than Capital Product. However, Walt Disney is 9.25 times less risky than Capital Product. It trades about 0.09 of its potential returns per unit of risk. Capital Product Partners is currently generating about -0.13 per unit of risk. If you would invest 10,103 in Walt Disney on September 3, 2024 and sell it today you would earn a total of 1,644 from holding Walt Disney or generate 16.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 46.4% |
| Values | Daily Returns |
Walt Disney vs. Capital Product Partners
Performance |
| Timeline |
| Walt Disney |
| Capital Product Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Disney and Capital Product Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Capital Product
The main advantage of trading using opposite Disney and Capital Product positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Capital Product 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 Product will offset losses from the drop in Capital Product's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| Capital Product vs. Danaos | Capital Product vs. Global Ship Lease | Capital Product vs. Euroseas | Capital Product vs. Navios Maritime Partners |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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