Correlation Between Disney and Canstar Resources
Can any of the company-specific risk be diversified away by investing in both Disney and Canstar Resources 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 Canstar Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Canstar Resources, you can compare the effects of market volatilities on Disney and Canstar Resources 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 Canstar Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Canstar Resources.
Diversification Opportunities for Disney and Canstar Resources
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Disney and Canstar is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Canstar Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canstar Resources 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 Canstar Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canstar Resources has no effect on the direction of Disney i.e., Disney and Canstar Resources go up and down completely randomly.
Pair Corralation between Disney and Canstar Resources
Considering the 90-day investment horizon Walt Disney is expected to generate 0.15 times more return on investment than Canstar Resources. However, Walt Disney is 6.62 times less risky than Canstar Resources. It trades about 0.31 of its potential returns per unit of risk. Canstar Resources is currently generating about -0.06 per unit of risk. If you would invest 8,913 in Walt Disney on September 2, 2024 and sell it today you would earn a total of 2,834 from holding Walt Disney or generate 31.8% 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. Canstar Resources
Performance |
| Timeline |
| Walt Disney |
| Canstar Resources |
Disney and Canstar Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Canstar Resources
The main advantage of trading using opposite Disney and Canstar Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Canstar Resources 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 Canstar Resources will offset losses from the drop in Canstar Resources' long position.| Disney vs. ADTRAN Inc | Disney vs. Belden Inc | Disney vs. ADC Therapeutics SA | Disney vs. Comtech Telecommunications Corp |
| Canstar Resources vs. ATT Inc | Canstar Resources vs. Merck Company | Canstar Resources vs. Walt Disney | Canstar Resources vs. Caterpillar |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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