Correlation Between Disney and XCana Petroleum
Can any of the company-specific risk be diversified away by investing in both Disney and XCana Petroleum 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 XCana Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and XCana Petroleum, you can compare the effects of market volatilities on Disney and XCana Petroleum 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 XCana Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and XCana Petroleum.
Diversification Opportunities for Disney and XCana Petroleum
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Disney and XCana is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and XCana Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCana Petroleum 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 XCana Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCana Petroleum has no effect on the direction of Disney i.e., Disney and XCana Petroleum go up and down completely randomly.
Pair Corralation between Disney and XCana Petroleum
Considering the 90-day investment horizon Walt Disney is expected to under-perform the XCana Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Walt Disney is 56.09 times less risky than XCana Petroleum. The stock trades about -0.16 of its potential returns per unit of risk. The XCana Petroleum is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3.50 in XCana Petroleum on October 23, 2024 and sell it today you would earn a total of 3.80 from holding XCana Petroleum or generate 108.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Walt Disney vs. XCana Petroleum
Performance |
| Timeline |
| Walt Disney |
| XCana Petroleum |
Disney and XCana Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and XCana Petroleum
The main advantage of trading using opposite Disney and XCana Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, XCana Petroleum 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 XCana Petroleum will offset losses from the drop in XCana Petroleum's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| XCana Petroleum vs. Xtra Energy Corp | XCana Petroleum vs. A1 Group | XCana Petroleum vs. New Generation Consumer | XCana Petroleum vs. Palayan Resources |
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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