Correlation Between Disney and SGS SA
Can any of the company-specific risk be diversified away by investing in both Disney and SGS SA 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 SGS SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and SGS SA, you can compare the effects of market volatilities on Disney and SGS SA 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 SGS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and SGS SA.
Diversification Opportunities for Disney and SGS SA
Pay attention - limited upside
The 3 months correlation between Disney and SGS is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA 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 SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Disney i.e., Disney and SGS SA go up and down completely randomly.
Pair Corralation between Disney and SGS SA
Considering the 90-day investment horizon Walt Disney is expected to generate 1.22 times more return on investment than SGS SA. However, Disney is 1.22 times more volatile than SGS SA. It trades about 0.48 of its potential returns per unit of risk. SGS SA is currently generating about -0.28 per unit of risk. If you would invest 9,620 in Walt Disney on August 27, 2024 and sell it today you would earn a total of 1,980 from holding Walt Disney or generate 20.58% 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. SGS SA
Performance |
| Timeline |
| Walt Disney |
| SGS SA |
Disney and SGS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and SGS SA
The main advantage of trading using opposite Disney and SGS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, SGS SA 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 SGS SA will offset losses from the drop in SGS SA's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| SGS SA vs. Sack Lunch Productions | SGS SA vs. Potash America | SGS SA vs. Dalrada Financial Corp | SGS SA vs. TransUnion |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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