Correlation Between Disney and ICU Medical
Can any of the company-specific risk be diversified away by investing in both Disney and ICU Medical 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 ICU Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and ICU Medical, you can compare the effects of market volatilities on Disney and ICU Medical 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 ICU Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and ICU Medical.
Diversification Opportunities for Disney and ICU Medical
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Disney and ICU is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and ICU Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICU Medical 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 ICU Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICU Medical has no effect on the direction of Disney i.e., Disney and ICU Medical go up and down completely randomly.
Pair Corralation between Disney and ICU Medical
Considering the 90-day investment horizon Walt Disney is expected to generate 0.72 times more return on investment than ICU Medical. However, Walt Disney is 1.38 times less risky than ICU Medical. It trades about -0.07 of its potential returns per unit of risk. ICU Medical is currently generating about -0.21 per unit of risk. If you would invest 11,334 in Walt Disney on November 27, 2024 and sell it today you would lose (214.00) from holding Walt Disney or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. ICU Medical
Performance |
| Timeline |
| Walt Disney |
| ICU Medical |
Disney and ICU Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and ICU Medical
The main advantage of trading using opposite Disney and ICU Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, ICU Medical 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 ICU Medical will offset losses from the drop in ICU Medical's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| ICU Medical vs. Merit Medical Systems | ICU Medical vs. The Cooper Companies, | ICU Medical vs. AngioDynamics | ICU Medical vs. AptarGroup |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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