Correlation Between Disney and 00165CAD6

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Can any of the company-specific risk be diversified away by investing in both Disney and 00165CAD6 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 00165CAD6 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and AMC ENTMT HLDGS, you can compare the effects of market volatilities on Disney and 00165CAD6 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 00165CAD6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and 00165CAD6.

Diversification Opportunities for Disney and 00165CAD6

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Disney and 00165CAD6 is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and AMC ENTMT HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMC ENTMT HLDGS 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 00165CAD6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMC ENTMT HLDGS has no effect on the direction of Disney i.e., Disney and 00165CAD6 go up and down completely randomly.

Pair Corralation between Disney and 00165CAD6

Considering the 90-day investment horizon Walt Disney is expected to generate 1.1 times more return on investment than 00165CAD6. However, Disney is 1.1 times more volatile than AMC ENTMT HLDGS. It trades about 0.48 of its potential returns per unit of risk. AMC ENTMT HLDGS is currently generating about 0.01 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 Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.24%
ValuesDaily Returns

Walt Disney  vs.  AMC ENTMT HLDGS

 Performance 
       Timeline  
Walt Disney 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.
AMC ENTMT HLDGS 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in AMC ENTMT HLDGS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 00165CAD6 may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Disney and 00165CAD6 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and 00165CAD6

The main advantage of trading using opposite Disney and 00165CAD6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, 00165CAD6 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 00165CAD6 will offset losses from the drop in 00165CAD6's long position.
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The idea behind Walt Disney and AMC ENTMT HLDGS 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.
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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