Correlation Between Disney and SGI Enhanced
Can any of the company-specific risk be diversified away by investing in both Disney and SGI Enhanced 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 SGI Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and SGI Enhanced Nasdaq 100, you can compare the effects of market volatilities on Disney and SGI Enhanced 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 SGI Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and SGI Enhanced.
Diversification Opportunities for Disney and SGI Enhanced
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Disney and SGI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and SGI Enhanced Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGI Enhanced Nasdaq 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 SGI Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGI Enhanced Nasdaq has no effect on the direction of Disney i.e., Disney and SGI Enhanced go up and down completely randomly.
Pair Corralation between Disney and SGI Enhanced
Considering the 90-day investment horizon Walt Disney is expected to generate 1.18 times more return on investment than SGI Enhanced. However, Disney is 1.18 times more volatile than SGI Enhanced Nasdaq 100. It trades about 0.08 of its potential returns per unit of risk. SGI Enhanced Nasdaq 100 is currently generating about 0.07 per unit of risk. If you would invest 10,230 in Walt Disney on September 1, 2024 and sell it today you would earn a total of 1,517 from holding Walt Disney or generate 14.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Walt Disney vs. SGI Enhanced Nasdaq 100
Performance |
| Timeline |
| Walt Disney |
| SGI Enhanced Nasdaq |
Disney and SGI Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and SGI Enhanced
The main advantage of trading using opposite Disney and SGI Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, SGI Enhanced 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 SGI Enhanced will offset losses from the drop in SGI Enhanced's long position.| Disney vs. ADTRAN Inc | Disney vs. Belden Inc | Disney vs. ADC Therapeutics SA | Disney vs. Comtech Telecommunications Corp |
| SGI Enhanced vs. Global X SP | SGI Enhanced vs. Amplify CWP Enhanced | SGI Enhanced vs. JPMorgan Equity Premium |
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 CEOs Directory module to screen CEOs from public companies around the world.
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