Correlation Between Disney and SPDR Kensho
Can any of the company-specific risk be diversified away by investing in both Disney and SPDR Kensho 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 SPDR Kensho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and SPDR Kensho Future, you can compare the effects of market volatilities on Disney and SPDR Kensho 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 SPDR Kensho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and SPDR Kensho.
Diversification Opportunities for Disney and SPDR Kensho
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Disney and SPDR is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and SPDR Kensho Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Kensho Future 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 SPDR Kensho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Kensho Future has no effect on the direction of Disney i.e., Disney and SPDR Kensho go up and down completely randomly.
Pair Corralation between Disney and SPDR Kensho
Considering the 90-day investment horizon Disney is expected to generate 1.3 times less return on investment than SPDR Kensho. In addition to that, Disney is 1.54 times more volatile than SPDR Kensho Future. It trades about 0.05 of its total potential returns per unit of risk. SPDR Kensho Future is currently generating about 0.1 per unit of volatility. If you would invest 4,813 in SPDR Kensho Future on August 31, 2024 and sell it today you would earn a total of 2,104 from holding SPDR Kensho Future or generate 43.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Walt Disney vs. SPDR Kensho Future
Performance |
| Timeline |
| Walt Disney |
| SPDR Kensho Future |
Disney and SPDR Kensho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and SPDR Kensho
The main advantage of trading using opposite Disney and SPDR Kensho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, SPDR Kensho 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 SPDR Kensho will offset losses from the drop in SPDR Kensho's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| SPDR Kensho vs. SPDR STOXX Europe | SPDR Kensho vs. SPDR Bloomberg Barclays | SPDR Kensho vs. SPDR Kensho Intelligent | SPDR Kensho vs. SPDR SP Kensho |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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