Correlation Between Disney and SPDR Russell
Can any of the company-specific risk be diversified away by investing in both Disney and SPDR Russell 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 SPDR Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and SPDR Russell 1000, you can compare the effects of market volatilities on Disney and SPDR Russell 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 SPDR Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and SPDR Russell.
Diversification Opportunities for Disney and SPDR Russell
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Disney and SPDR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and SPDR Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Russell 1000 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 SPDR Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Russell 1000 has no effect on the direction of Disney i.e., Disney and SPDR Russell go up and down completely randomly.
Pair Corralation between Disney and SPDR Russell
Considering the 90-day investment horizon Disney is expected to generate 2.61 times less return on investment than SPDR Russell. In addition to that, Disney is 2.03 times more volatile than SPDR Russell 1000. It trades about 0.02 of its total potential returns per unit of risk. SPDR Russell 1000 is currently generating about 0.12 per unit of volatility. If you would invest 9,930 in SPDR Russell 1000 on August 27, 2024 and sell it today you would earn a total of 1,706 from holding SPDR Russell 1000 or generate 17.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. SPDR Russell 1000
Performance |
| Timeline |
| Walt Disney |
| SPDR Russell 1000 |
Disney and SPDR Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and SPDR Russell
The main advantage of trading using opposite Disney and SPDR Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, SPDR Russell 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 SPDR Russell will offset losses from the drop in SPDR Russell's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| SPDR Russell vs. SPDR Russell 1000 | SPDR Russell vs. SPDR MSCI USA | SPDR Russell vs. SPDR SP 400 | SPDR Russell vs. SPDR MSCI EAFE |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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