Correlation Between Disney and Jackson Square
Can any of the company-specific risk be diversified away by investing in both Disney and Jackson Square 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 Jackson Square into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Jackson Square Smid Cap, you can compare the effects of market volatilities on Disney and Jackson Square 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 Jackson Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Jackson Square.
Diversification Opportunities for Disney and Jackson Square
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Disney and Jackson is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Jackson Square Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackson Square Smid 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 Jackson Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackson Square Smid has no effect on the direction of Disney i.e., Disney and Jackson Square go up and down completely randomly.
Pair Corralation between Disney and Jackson Square
Considering the 90-day investment horizon Walt Disney is expected to generate 1.48 times more return on investment than Jackson Square. However, Disney is 1.48 times more volatile than Jackson Square Smid Cap. It trades about 0.05 of its potential returns per unit of risk. Jackson Square Smid Cap is currently generating about 0.04 per unit of risk. If you would invest 9,241 in Walt Disney on September 4, 2024 and sell it today you would earn a total of 2,475 from holding Walt Disney or generate 26.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. Jackson Square Smid Cap
Performance |
| Timeline |
| Walt Disney |
| Jackson Square Smid |
Disney and Jackson Square Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Jackson Square
The main advantage of trading using opposite Disney and Jackson Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Jackson Square 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 Jackson Square will offset losses from the drop in Jackson Square's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| Jackson Square vs. Jackson Square Smid Cap | Jackson Square vs. Virtus Kar Small Cap | Jackson Square vs. William Blair Small Mid | Jackson Square vs. Conestoga Small Cap |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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