Correlation Between Disney and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both Disney and Franklin FTSE 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 Franklin FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Franklin FTSE Canada, you can compare the effects of market volatilities on Disney and Franklin FTSE 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 Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Franklin FTSE.
Diversification Opportunities for Disney and Franklin FTSE
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Disney and Franklin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Franklin FTSE Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Canada 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 Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Canada has no effect on the direction of Disney i.e., Disney and Franklin FTSE go up and down completely randomly.
Pair Corralation between Disney and Franklin FTSE
Considering the 90-day investment horizon Walt Disney is expected to generate 2.81 times more return on investment than Franklin FTSE. However, Disney is 2.81 times more volatile than Franklin FTSE Canada. It trades about 0.51 of its potential returns per unit of risk. Franklin FTSE Canada is currently generating about 0.44 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 | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walt Disney vs. Franklin FTSE Canada
Performance |
| Timeline |
| Walt Disney |
| Franklin FTSE Canada |
Disney and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Franklin FTSE
The main advantage of trading using opposite Disney and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Franklin FTSE 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 Franklin FTSE will offset losses from the drop in Franklin FTSE's long position.| Disney vs. ADTRAN Inc | Disney vs. Belden Inc | Disney vs. ADC Therapeutics SA | Disney vs. Comtech Telecommunications Corp |
| Franklin FTSE vs. Franklin FTSE Australia | Franklin FTSE vs. Franklin FTSE Germany | Franklin FTSE vs. Franklin FTSE United | Franklin FTSE vs. Franklin FTSE Japan |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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