Correlation Between Disney and Sterling Check
Can any of the company-specific risk be diversified away by investing in both Disney and Sterling Check 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 Sterling Check into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Sterling Check Corp, you can compare the effects of market volatilities on Disney and Sterling Check 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 Sterling Check. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Sterling Check.
Diversification Opportunities for Disney and Sterling Check
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Disney and Sterling is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Sterling Check Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Check Corp 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 Sterling Check. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Check Corp has no effect on the direction of Disney i.e., Disney and Sterling Check go up and down completely randomly.
Pair Corralation between Disney and Sterling Check
Considering the 90-day investment horizon Disney is expected to generate 1.18 times less return on investment than Sterling Check. But when comparing it to its historical volatility, Walt Disney is 1.32 times less risky than Sterling Check. It trades about 0.06 of its potential returns per unit of risk. Sterling Check Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,363 in Sterling Check Corp on September 20, 2024 and sell it today you would earn a total of 311.00 from holding Sterling Check Corp or generate 22.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 86.69% |
| Values | Daily Returns |
Walt Disney vs. Sterling Check Corp
Performance |
| Timeline |
| Walt Disney |
| Sterling Check Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Disney and Sterling Check Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Sterling Check
The main advantage of trading using opposite Disney and Sterling Check positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Sterling Check 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 Sterling Check will offset losses from the drop in Sterling Check's long position.The idea behind Walt Disney and Sterling Check Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sterling Check vs. EverCommerce | Sterling Check vs. Evertec | Sterling Check vs. Consensus Cloud Solutions | Sterling Check vs. CSG Systems International |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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