Correlation Between Disney and Nel ASA
Can any of the company-specific risk be diversified away by investing in both Disney and Nel ASA 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 Nel ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Nel ASA, you can compare the effects of market volatilities on Disney and Nel ASA 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 Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Nel ASA.
Diversification Opportunities for Disney and Nel ASA
Pay attention - limited upside
The 3 months correlation between Disney and Nel is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA 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 Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Disney i.e., Disney and Nel ASA go up and down completely randomly.
Pair Corralation between Disney and Nel ASA
Considering the 90-day investment horizon Walt Disney is expected to generate 0.35 times more return on investment than Nel ASA. However, Walt Disney is 2.82 times less risky than Nel ASA. It trades about 0.04 of its potential returns per unit of risk. Nel ASA is currently generating about -0.05 per unit of risk. If you would invest 9,396 in Walt Disney on September 3, 2024 and sell it today you would earn a total of 2,351 from holding Walt Disney or generate 25.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. Nel ASA
Performance |
| Timeline |
| Walt Disney |
| Nel ASA |
Disney and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Nel ASA
The main advantage of trading using opposite Disney and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA'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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |