Correlation Between Fox Corp and Disney
Can any of the company-specific risk be diversified away by investing in both Fox Corp and Disney 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 Fox Corp and Disney into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fox Corp Class and Walt Disney, you can compare the effects of market volatilities on Fox Corp and Disney 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 Fox Corp with a short position of Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fox Corp and Disney.
Diversification Opportunities for Fox Corp and Disney
Almost no diversification
The 3 months correlation between Fox and Disney is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fox Corp Class and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Fox Corp 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 Fox Corp Class are associated (or correlated) with Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Fox Corp i.e., Fox Corp and Disney go up and down completely randomly.
Pair Corralation between Fox Corp and Disney
Considering the 90-day investment horizon Fox Corp Class is expected to generate 0.82 times more return on investment than Disney. However, Fox Corp Class is 1.22 times less risky than Disney. It trades about 0.08 of its potential returns per unit of risk. Walt Disney is currently generating about 0.05 per unit of risk. If you would invest 3,082 in Fox Corp Class on August 31, 2024 and sell it today you would earn a total of 1,391 from holding Fox Corp Class or generate 45.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fox Corp Class vs. Walt Disney
Performance |
| Timeline |
| Fox Corp Class |
| Walt Disney |
Fox Corp and Disney Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fox Corp and Disney
The main advantage of trading using opposite Fox Corp and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fox Corp position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.| Fox Corp vs. News Corp A | Fox Corp vs. News Corp B | Fox Corp vs. Paramount Global Class | Fox Corp vs. Liberty Media |
| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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