Correlation Between Disney and Smart REIT
Can any of the company-specific risk be diversified away by investing in both Disney and Smart REIT 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 Smart REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Smart REIT, you can compare the effects of market volatilities on Disney and Smart REIT 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 Smart REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Smart REIT.
Diversification Opportunities for Disney and Smart REIT
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Disney and Smart is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Smart REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart REIT 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 Smart REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart REIT has no effect on the direction of Disney i.e., Disney and Smart REIT go up and down completely randomly.
Pair Corralation between Disney and Smart REIT
Considering the 90-day investment horizon Walt Disney is expected to generate 0.54 times more return on investment than Smart REIT. However, Walt Disney is 1.86 times less risky than Smart REIT. It trades about 0.04 of its potential returns per unit of risk. Smart REIT is currently generating about 0.02 per unit of risk. If you would invest 9,143 in Walt Disney on August 28, 2024 and sell it today you would earn a total of 2,457 from holding Walt Disney or generate 26.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.78% |
| Values | Daily Returns |
Walt Disney vs. Smart REIT
Performance |
| Timeline |
| Walt Disney |
| Smart REIT |
Disney and Smart REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Smart REIT
The main advantage of trading using opposite Disney and Smart REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Smart REIT 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 Smart REIT will offset losses from the drop in Smart REIT's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| Smart REIT vs. Phillips Edison Co | Smart REIT vs. Simon Property Group | Smart REIT vs. Inventrust Properties Corp | Smart REIT vs. Site Centers Corp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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