Correlation Between Bolsa Mexicana and Disney

Can any of the company-specific risk be diversified away by investing in both Bolsa Mexicana 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 Bolsa Mexicana and Disney into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bolsa Mexicana de and The Walt Disney, you can compare the effects of market volatilities on Bolsa Mexicana 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 Bolsa Mexicana with a short position of Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bolsa Mexicana and Disney.

Diversification Opportunities for Bolsa Mexicana and Disney

0.13

Correlation Coefficient

Bolsa Mexicana  Disney

Average diversification

The 3 months correlation between Bolsa and Disney is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bolsa Mexicana de and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Bolsa Mexicana 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 Bolsa Mexicana de 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 Bolsa Mexicana i.e., Bolsa Mexicana and Disney go up and down completely randomly.

Pair Corralation between Bolsa Mexicana and Disney

Assuming the 90 days trading horizon Bolsa Mexicana de is expected to under-perform the Disney. In addition to that, Bolsa Mexicana is 1.7 times more volatile than The Walt Disney. It trades about -0.18 of its total potential returns per unit of risk. The Walt Disney is currently generating about -0.09 per unit of volatility. If you would invest  230,976  in The Walt Disney on October 10, 2024 and sell it today you would lose (4,007) from holding The Walt Disney or give up 1.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bolsa Mexicana de  vs.  The Walt Disney

Bolsa Mexicana de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bolsa Mexicana de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Bolsa Mexicana is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Walt Disney

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Walt Disney are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Disney showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bolsa Mexicana and Disney

The main advantage of trading using opposite Bolsa Mexicana and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bolsa Mexicana 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.

The idea behind Bolsa Mexicana de and The Walt Disney pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.