Correlation Between Disney and NN Group
Can any of the company-specific risk be diversified away by investing in both Disney and NN Group 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 NN Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and NN Group NV, you can compare the effects of market volatilities on Disney and NN Group 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 NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and NN Group.
Diversification Opportunities for Disney and NN Group
Pay attention - limited upside
The 3 months correlation between Disney and NNGRY is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV 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 NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Disney i.e., Disney and NN Group go up and down completely randomly.
Pair Corralation between Disney and NN Group
Considering the 90-day investment horizon Walt Disney is expected to generate 1.67 times more return on investment than NN Group. However, Disney is 1.67 times more volatile than NN Group NV. It trades about 0.52 of its potential returns per unit of risk. NN Group NV is currently generating about -0.37 per unit of risk. If you would invest 9,579 in Walt Disney on September 4, 2024 and sell it today you would earn a total of 2,137 from holding Walt Disney or generate 22.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. NN Group NV
Performance |
| Timeline |
| Walt Disney |
| NN Group NV |
Disney and NN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and NN Group
The main advantage of trading using opposite Disney and NN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, NN Group 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 NN Group will offset losses from the drop in NN Group's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| NN Group vs. Sun Life Financial | NN Group vs. Athene Holding | NN Group vs. Assicurazioni Generali SpA | NN Group vs. AXA SA |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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