Correlation Between Disney and Wahed Dow
Can any of the company-specific risk be diversified away by investing in both Disney and Wahed Dow 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 Wahed Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Wahed Dow Jones, you can compare the effects of market volatilities on Disney and Wahed Dow 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 Wahed Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Wahed Dow.
Diversification Opportunities for Disney and Wahed Dow
Very good diversification
The 3 months correlation between Disney and Wahed is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Wahed Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahed Dow Jones 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 Wahed Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahed Dow Jones has no effect on the direction of Disney i.e., Disney and Wahed Dow go up and down completely randomly.
Pair Corralation between Disney and Wahed Dow
Considering the 90-day investment horizon Walt Disney is expected to generate 1.3 times more return on investment than Wahed Dow. However, Disney is 1.3 times more volatile than Wahed Dow Jones. It trades about 0.26 of its potential returns per unit of risk. Wahed Dow Jones is currently generating about -0.08 per unit of risk. If you would invest 9,056 in Walt Disney on August 23, 2024 and sell it today you would earn a total of 2,416 from holding Walt Disney or generate 26.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. Wahed Dow Jones
Performance |
| Timeline |
| Walt Disney |
| Wahed Dow Jones |
Disney and Wahed Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Wahed Dow
The main advantage of trading using opposite Disney and Wahed Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Wahed Dow 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 Wahed Dow will offset losses from the drop in Wahed Dow's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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