Correlation Between Disney and Santos
Can any of the company-specific risk be diversified away by investing in both Disney and Santos 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 Santos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Santos, you can compare the effects of market volatilities on Disney and Santos 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 Santos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Santos.
Diversification Opportunities for Disney and Santos
Pay attention - limited upside
The 3 months correlation between Disney and Santos is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Santos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santos 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 Santos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santos has no effect on the direction of Disney i.e., Disney and Santos go up and down completely randomly.
Pair Corralation between Disney and Santos
Considering the 90-day investment horizon Walt Disney is expected to generate 0.46 times more return on investment than Santos. However, Walt Disney is 2.17 times less risky than Santos. It trades about 0.08 of its potential returns per unit of risk. Santos is currently generating about -0.01 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 Against |
| Strength | Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Walt Disney vs. Santos
Performance |
| Timeline |
| Walt Disney |
| Santos |
Disney and Santos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Santos
The main advantage of trading using opposite Disney and Santos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Santos 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 Santos will offset losses from the drop in Santos' long position.| Disney vs. ADTRAN Inc | Disney vs. Belden Inc | Disney vs. ADC Therapeutics SA | Disney vs. Comtech Telecommunications Corp |
| Santos vs. Permian Resources | Santos vs. Devon Energy | Santos vs. EOG Resources | Santos vs. Coterra Energy |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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