Correlation Between Disney and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both Disney and SSgA SPDR 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 SSgA SPDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and SSgA SPDR ETFs, you can compare the effects of market volatilities on Disney and SSgA SPDR 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 SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and SSgA SPDR.
Diversification Opportunities for Disney and SSgA SPDR
Very poor diversification
The 3 months correlation between Disney and SSgA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs 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 SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Disney i.e., Disney and SSgA SPDR go up and down completely randomly.
Pair Corralation between Disney and SSgA SPDR
Considering the 90-day investment horizon Disney is expected to generate 1.19 times less return on investment than SSgA SPDR. In addition to that, Disney is 1.23 times more volatile than SSgA SPDR ETFs. It trades about 0.03 of its total potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.05 per unit of volatility. If you would invest 5,209 in SSgA SPDR ETFs on September 3, 2024 and sell it today you would earn a total of 1,779 from holding SSgA SPDR ETFs or generate 34.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.38% |
| Values | Daily Returns |
Walt Disney vs. SSgA SPDR ETFs
Performance |
| Timeline |
| Walt Disney |
| SSgA SPDR ETFs |
Disney and SSgA SPDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and SSgA SPDR
The main advantage of trading using opposite Disney and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, SSgA SPDR 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 SSgA SPDR will offset losses from the drop in SSgA SPDR's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| SSgA SPDR vs. Vanguard Total Stock | SSgA SPDR vs. SPDR SP 500 | SSgA SPDR vs. Vanguard Total Bond | SSgA SPDR vs. Vanguard Value Index |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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