Correlation Between Disney and Screaming Eagle
Can any of the company-specific risk be diversified away by investing in both Disney and Screaming Eagle 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 Screaming Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Screaming Eagle Acquisition, you can compare the effects of market volatilities on Disney and Screaming Eagle 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 Screaming Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Screaming Eagle.
Diversification Opportunities for Disney and Screaming Eagle
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Disney and Screaming is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Screaming Eagle Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Screaming Eagle Acqu 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 Screaming Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Screaming Eagle Acqu has no effect on the direction of Disney i.e., Disney and Screaming Eagle go up and down completely randomly.
Pair Corralation between Disney and Screaming Eagle
Considering the 90-day investment horizon Walt Disney is expected to generate 6.55 times more return on investment than Screaming Eagle. However, Disney is 6.55 times more volatile than Screaming Eagle Acquisition. It trades about 0.04 of its potential returns per unit of risk. Screaming Eagle Acquisition is currently generating about 0.11 per unit of risk. If you would invest 9,265 in Walt Disney on August 30, 2024 and sell it today you would earn a total of 2,495 from holding Walt Disney or generate 26.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.11% |
| Values | Daily Returns |
Walt Disney vs. Screaming Eagle Acquisition
Performance |
| Timeline |
| Walt Disney |
| Screaming Eagle Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Disney and Screaming Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Screaming Eagle
The main advantage of trading using opposite Disney and Screaming Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Screaming Eagle 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 Screaming Eagle will offset losses from the drop in Screaming Eagle'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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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