Correlation Between Disney and Gray Television
Can any of the company-specific risk be diversified away by investing in both Disney and Gray Television 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 Gray Television into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Gray Television, you can compare the effects of market volatilities on Disney and Gray Television 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 Gray Television. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Gray Television.
Diversification Opportunities for Disney and Gray Television
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Disney and Gray is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Gray Television in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gray Television 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 Gray Television. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gray Television has no effect on the direction of Disney i.e., Disney and Gray Television go up and down completely randomly.
Pair Corralation between Disney and Gray Television
Considering the 90-day investment horizon Walt Disney is expected to generate 0.4 times more return on investment than Gray Television. However, Walt Disney is 2.47 times less risky than Gray Television. It trades about 0.03 of its potential returns per unit of risk. Gray Television is currently generating about -0.01 per unit of risk. If you would invest 10,138 in Walt Disney on August 31, 2024 and sell it today you would earn a total of 1,622 from holding Walt Disney or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. Gray Television
Performance |
| Timeline |
| Walt Disney |
| Gray Television |
Disney and Gray Television Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Gray Television
The main advantage of trading using opposite Disney and Gray Television positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Gray Television 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 Gray Television will offset losses from the drop in Gray Television's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| Gray Television vs. E W Scripps | Gray Television vs. Saga Communications | Gray Television vs. iHeartMedia Class A | Gray Television vs. Cumulus Media Class |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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