Correlation Between Disney and Exxon
Can any of the company-specific risk be diversified away by investing in both Disney and Exxon 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 Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Exxon Mobil Corp, you can compare the effects of market volatilities on Disney and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Exxon.
Diversification Opportunities for Disney and Exxon
Significant diversification
The 3 months correlation between Disney and Exxon is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of Disney i.e., Disney and Exxon go up and down completely randomly.
Pair Corralation between Disney and Exxon
Considering the 90-day investment horizon Walt Disney is expected to generate 1.18 times more return on investment than Exxon. However, Disney is 1.18 times more volatile than Exxon Mobil Corp. It trades about 0.04 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.02 per unit of risk. If you would invest 8,732 in Walt Disney on September 13, 2024 and sell it today you would earn a total of 2,758 from holding Walt Disney or generate 31.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. Exxon Mobil Corp
Performance |
| Timeline |
| Walt Disney |
| Exxon Mobil Corp |
Disney and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and Exxon
The main advantage of trading using opposite Disney and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| Disney vs. Liberty Media | Disney vs. Atlanta Braves Holdings, | Disney vs. News Corp B | Disney vs. News Corp A |
| Exxon vs. Aquagold International | Exxon vs. Thrivent High Yield | Exxon vs. Morningstar Unconstrained Allocation | Exxon vs. Via Renewables |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |