Correlation Between Disney and Whole Earth
Can any of the company-specific risk be diversified away by investing in both Disney and Whole Earth 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 Whole Earth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Whole Earth Brands, you can compare the effects of market volatilities on Disney and Whole Earth 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 Whole Earth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Whole Earth.
Diversification Opportunities for Disney and Whole Earth
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Disney and Whole is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Whole Earth Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whole Earth Brands 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 Whole Earth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whole Earth Brands has no effect on the direction of Disney i.e., Disney and Whole Earth go up and down completely randomly.
Pair Corralation between Disney and Whole Earth
Considering the 90-day investment horizon Walt Disney is expected to generate 0.1 times more return on investment than Whole Earth. However, Walt Disney is 10.23 times less risky than Whole Earth. It trades about 0.08 of its potential returns per unit of risk. Whole Earth Brands is currently generating about -0.15 per unit of risk. If you would invest 10,230 in Walt Disney on August 30, 2024 and sell it today you would earn a total of 1,530 from holding Walt Disney or generate 14.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 36.51% |
| Values | Daily Returns |
Walt Disney vs. Whole Earth Brands
Performance |
| Timeline |
| Walt Disney |
| Whole Earth Brands |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Disney and Whole Earth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Whole Earth
The main advantage of trading using opposite Disney and Whole Earth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Whole Earth 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 Whole Earth will offset losses from the drop in Whole Earth's long position.| Disney vs. Liberty Media | Disney vs. Atlanta Braves Holdings, | Disney vs. News Corp B | Disney vs. News Corp A |
| Whole Earth vs. Seneca Foods Corp | Whole Earth vs. Lifeway Foods | Whole Earth vs. John B Sanfilippo | Whole Earth vs. Real Good Food |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |