Correlation Between Disney and Fidelity Contrafund
Can any of the company-specific risk be diversified away by investing in both Disney and Fidelity Contrafund 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 Fidelity Contrafund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Fidelity Trafund Class, you can compare the effects of market volatilities on Disney and Fidelity Contrafund 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 Fidelity Contrafund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Fidelity Contrafund.
Diversification Opportunities for Disney and Fidelity Contrafund
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Disney and Fidelity is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Fidelity Trafund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Trafund Class 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 Fidelity Contrafund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Trafund Class has no effect on the direction of Disney i.e., Disney and Fidelity Contrafund go up and down completely randomly.
Pair Corralation between Disney and Fidelity Contrafund
Considering the 90-day investment horizon Walt Disney is expected to generate 2.19 times more return on investment than Fidelity Contrafund. However, Disney is 2.19 times more volatile than Fidelity Trafund Class. It trades about 0.51 of its potential returns per unit of risk. Fidelity Trafund Class is currently generating about 0.26 per unit of risk. If you would invest 9,620 in Walt Disney on September 1, 2024 and sell it today you would earn a total of 2,127 from holding Walt Disney or generate 22.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walt Disney vs. Fidelity Trafund Class
Performance |
| Timeline |
| Walt Disney |
| Fidelity Trafund Class |
Disney and Fidelity Contrafund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Fidelity Contrafund
The main advantage of trading using opposite Disney and Fidelity Contrafund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Fidelity Contrafund 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 Fidelity Contrafund will offset losses from the drop in Fidelity Contrafund's long position.| Disney vs. ADTRAN Inc | Disney vs. Belden Inc | Disney vs. ADC Therapeutics SA | Disney vs. Comtech Telecommunications Corp |
| Fidelity Contrafund vs. T Rowe Price | Fidelity Contrafund vs. Legg Mason Partners | Fidelity Contrafund vs. Kinetics Small Cap | Fidelity Contrafund vs. Jpmorgan 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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