Correlation Between Disney and F M
Can any of the company-specific risk be diversified away by investing in both Disney and F M 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 F M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and F M Bank, you can compare the effects of market volatilities on Disney and F M 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 F M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and F M.
Diversification Opportunities for Disney and F M
Excellent diversification
The 3 months correlation between Disney and FMBM is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and F M Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F M Bank 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 F M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F M Bank has no effect on the direction of Disney i.e., Disney and F M go up and down completely randomly.
Pair Corralation between Disney and F M
Considering the 90-day investment horizon Disney is expected to generate 1.55 times less return on investment than F M. But when comparing it to its historical volatility, Walt Disney is 2.56 times less risky than F M. It trades about 0.04 of its potential returns per unit of risk. F M Bank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,066 in F M Bank on August 28, 2024 and sell it today you would earn a total of 19.00 from holding F M Bank or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 87.9% |
| Values | Daily Returns |
Walt Disney vs. F M Bank
Performance |
| Timeline |
| Walt Disney |
| F M Bank |
Disney and F M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and F M
The main advantage of trading using opposite Disney and F M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, F M 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 F M will offset losses from the drop in F M's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| F M vs. Invesco High Income | F M vs. Blackrock Muniholdings Ny | F M vs. MFS Investment Grade | F M vs. Federated Premier Municipal |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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