Correlation Between Disney and Core Lithium
Can any of the company-specific risk be diversified away by investing in both Disney and Core Lithium 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 Core Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Core Lithium, you can compare the effects of market volatilities on Disney and Core Lithium 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 Core Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Core Lithium.
Diversification Opportunities for Disney and Core Lithium
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Disney and Core is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Core Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Lithium 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 Core Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Lithium has no effect on the direction of Disney i.e., Disney and Core Lithium go up and down completely randomly.
Pair Corralation between Disney and Core Lithium
Considering the 90-day investment horizon Walt Disney is expected to generate 0.24 times more return on investment than Core Lithium. However, Walt Disney is 4.23 times less risky than Core Lithium. It trades about 0.53 of its potential returns per unit of risk. Core Lithium is currently generating about -0.14 per unit of risk. If you would invest 9,581 in Walt Disney on September 2, 2024 and sell it today you would earn a total of 2,166 from holding Walt Disney or generate 22.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Walt Disney vs. Core Lithium
Performance |
Timeline |
Walt Disney |
Core Lithium |
Disney and Core Lithium Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Disney and Core Lithium
The main advantage of trading using opposite Disney and Core Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Core Lithium 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 Core Lithium will offset losses from the drop in Core Lithium's long position.Disney vs. ADTRAN Inc | Disney vs. Belden Inc | Disney vs. ADC Therapeutics SA | Disney vs. Comtech Telecommunications Corp |
Core Lithium vs. Macmahon Holdings Limited | Core Lithium vs. Prime Meridian Resources | Core Lithium vs. International Lithium Corp | Core Lithium vs. Hudson Resources |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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