Correlation Between Disney and Aeye
Can any of the company-specific risk be diversified away by investing in both Disney and Aeye 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 Aeye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Aeye Inc, you can compare the effects of market volatilities on Disney and Aeye 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 Aeye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Aeye.
Diversification Opportunities for Disney and Aeye
Excellent diversification
The 3 months correlation between Disney and Aeye is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc 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 Aeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeye Inc has no effect on the direction of Disney i.e., Disney and Aeye go up and down completely randomly.
Pair Corralation between Disney and Aeye
Considering the 90-day investment horizon Walt Disney is expected to generate 0.32 times more return on investment than Aeye. However, Walt Disney is 3.08 times less risky than Aeye. It trades about 0.31 of its potential returns per unit of risk. Aeye Inc is currently generating about 0.01 per unit of risk. If you would invest 10,099 in Walt Disney on September 13, 2024 and sell it today you would earn a total of 1,381 from holding Walt Disney or generate 13.67% 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. Aeye Inc
Performance |
| Timeline |
| Walt Disney |
| Aeye Inc |
Disney and Aeye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Aeye
The main advantage of trading using opposite Disney and Aeye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Aeye 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 Aeye will offset losses from the drop in Aeye's long position.| Disney vs. Liberty Media | Disney vs. Atlanta Braves Holdings, | Disney vs. News Corp B | Disney vs. News Corp A |
| Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Aeva Technologies | Aeye vs. Quantumscape Corp |
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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