Correlation Between Disney and First Northern
Can any of the company-specific risk be diversified away by investing in both Disney and First Northern 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 First Northern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and First Northern Community, you can compare the effects of market volatilities on Disney and First Northern 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 First Northern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and First Northern.
Diversification Opportunities for Disney and First Northern
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Disney and First is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and First Northern Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Northern Community 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 First Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Northern Community has no effect on the direction of Disney i.e., Disney and First Northern go up and down completely randomly.
Pair Corralation between Disney and First Northern
Considering the 90-day investment horizon Disney is expected to generate 2.62 times less return on investment than First Northern. In addition to that, Disney is 1.62 times more volatile than First Northern Community. It trades about 0.03 of its total potential returns per unit of risk. First Northern Community is currently generating about 0.12 per unit of volatility. If you would invest 828.00 in First Northern Community on August 25, 2024 and sell it today you would earn a total of 172.00 from holding First Northern Community or generate 20.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.05% |
| Values | Daily Returns |
Walt Disney vs. First Northern Community
Performance |
| Timeline |
| Walt Disney |
| First Northern Community |
Disney and First Northern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and First Northern
The main advantage of trading using opposite Disney and First Northern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, First Northern 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 First Northern will offset losses from the drop in First Northern's long position.| Disney vs. ADTRAN Inc | Disney vs. Belden Inc | Disney vs. ADC Therapeutics SA | Disney vs. Comtech Telecommunications Corp |
| First Northern vs. Community West Bancshares | First Northern vs. Home Bancorp | First Northern vs. CB Financial Services | First Northern vs. Civista Bancshares |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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