Correlation Between Walt Disney and Apple
Can any of the company-specific risk be diversified away by investing in both Walt Disney and Apple 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 Walt Disney and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Apple Inc DRC, you can compare the effects of market volatilities on Walt Disney and Apple 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 Walt Disney with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walt Disney and Apple.
Diversification Opportunities for Walt Disney and Apple
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Walt and Apple is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Apple Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc DRC and Walt 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc DRC has no effect on the direction of Walt Disney i.e., Walt Disney and Apple go up and down completely randomly.
Pair Corralation between Walt Disney and Apple
Assuming the 90 days trading horizon Walt Disney is expected to generate 0.63 times more return on investment than Apple. However, Walt Disney is 1.6 times less risky than Apple. It trades about 0.0 of its potential returns per unit of risk. Apple Inc DRC is currently generating about -0.13 per unit of risk. If you would invest 1,065,000 in Walt Disney on October 20, 2024 and sell it today you would lose (2,500) from holding Walt Disney or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. Apple Inc DRC
Performance |
| Timeline |
| Walt Disney |
| Apple Inc DRC |
Walt Disney and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walt Disney and Apple
The main advantage of trading using opposite Walt Disney and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walt Disney position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Walt Disney vs. Walmart | Walt Disney vs. American Express Co | Walt Disney vs. QUALCOMM Incorporated | Walt Disney vs. United States Steel |
| Apple vs. Walmart | Apple vs. American Express Co | Apple vs. QUALCOMM Incorporated | Apple vs. United States Steel |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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