Correlation Between Disney and Mainstay
Can any of the company-specific risk be diversified away by investing in both Disney and Mainstay 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 Mainstay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Mainstay Sp 500, you can compare the effects of market volatilities on Disney and Mainstay 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 Mainstay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Mainstay.
Diversification Opportunities for Disney and Mainstay
Average diversification
The 3 months correlation between Disney and Mainstay is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Mainstay Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Sp 500 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 Mainstay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Sp 500 has no effect on the direction of Disney i.e., Disney and Mainstay go up and down completely randomly.
Pair Corralation between Disney and Mainstay
Considering the 90-day investment horizon Walt Disney is expected to generate 1.62 times more return on investment than Mainstay. However, Disney is 1.62 times more volatile than Mainstay Sp 500. It trades about 0.14 of its potential returns per unit of risk. Mainstay Sp 500 is currently generating about 0.15 per unit of risk. If you would invest 10,702 in Walt Disney on November 18, 2024 and sell it today you would earn a total of 336.00 from holding Walt Disney or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. Mainstay Sp 500
Performance |
| Timeline |
| Walt Disney |
| Mainstay Sp 500 |
Disney and Mainstay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Mainstay
The main advantage of trading using opposite Disney and Mainstay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Mainstay 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 Mainstay will offset losses from the drop in Mainstay's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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