Correlation Between Disney and WisdomTree
Can any of the company-specific risk be diversified away by investing in both Disney and WisdomTree 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 WisdomTree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and WisdomTree, you can compare the effects of market volatilities on Disney and WisdomTree 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 WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and WisdomTree.
Diversification Opportunities for Disney and WisdomTree
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Disney and WisdomTree is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and WisdomTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree 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 WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree has no effect on the direction of Disney i.e., Disney and WisdomTree go up and down completely randomly.
Pair Corralation between Disney and WisdomTree
If you would invest 9,620 in Walt Disney on August 27, 2024 and sell it today you would earn a total of 1,980 from holding Walt Disney or generate 20.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 4.76% |
| Values | Daily Returns |
Walt Disney vs. WisdomTree
Performance |
| Timeline |
| Walt Disney |
| WisdomTree |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Disney and WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and WisdomTree
The main advantage of trading using opposite Disney and WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, WisdomTree 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 WisdomTree will offset losses from the drop in WisdomTree's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| WisdomTree vs. MFS High Income | WisdomTree vs. MFS Investment Grade | WisdomTree vs. Eaton Vance National | WisdomTree vs. Invesco High Income |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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