Correlation Between Walt Disney and Cresud SA
Can any of the company-specific risk be diversified away by investing in both Walt Disney and Cresud SA 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 Cresud SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Cresud SA, you can compare the effects of market volatilities on Walt Disney and Cresud SA 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 Cresud SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walt Disney and Cresud SA.
Diversification Opportunities for Walt Disney and Cresud SA
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walt and Cresud is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Cresud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud SA 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 Cresud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud SA has no effect on the direction of Walt Disney i.e., Walt Disney and Cresud SA go up and down completely randomly.
Pair Corralation between Walt Disney and Cresud SA
Assuming the 90 days trading horizon Walt Disney is expected to generate 0.39 times more return on investment than Cresud SA. However, Walt Disney is 2.58 times less risky than Cresud SA. It trades about 0.17 of its potential returns per unit of risk. Cresud SA is currently generating about -0.02 per unit of risk. If you would invest 1,082,500 in Walt Disney on November 2, 2024 and sell it today you would earn a total of 40,000 from holding Walt Disney or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walt Disney vs. Cresud SA
Performance |
| Timeline |
| Walt Disney |
| Cresud SA |
Walt Disney and Cresud SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walt Disney and Cresud SA
The main advantage of trading using opposite Walt Disney and Cresud SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walt Disney position performs unexpectedly, Cresud SA 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 Cresud SA will offset losses from the drop in Cresud SA's long position.| Walt Disney vs. United States Steel | Walt Disney vs. Agrometal SAI | Walt Disney vs. Transportadora de Gas | Walt Disney vs. Harmony Gold Mining |
| Cresud SA vs. Harmony Gold Mining | Cresud SA vs. United States Steel | Cresud SA vs. Transportadora de Gas | Cresud SA vs. Telecom Argentina |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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