Correlation Between Cable One and Walt Disney

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

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

Diversification Opportunities for Cable One and Walt Disney

0.63

Correlation Coefficient

Cable One  Walt Disney

Poor diversification

The 3 months correlation between Cable and Walt is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Cable One 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 Cable One are associated (or correlated) with Walt 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 Cable One i.e., Cable One and Walt Disney go up and down completely randomly.

Pair Corralation between Cable One and Walt Disney

Assuming the 90 days trading horizon Cable One is expected to under-perform the Walt Disney. In addition to that, Cable One is 1.85 times more volatile than The Walt Disney. It trades about -0.28 of its total potential returns per unit of risk. The Walt Disney is currently generating about -0.06 per unit of volatility. If you would invest  4,723  in The Walt Disney on December 1, 2024 and sell it today you would lose (312.00) from holding The Walt Disney or give up 6.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Cable One  vs.  The Walt Disney

Cable One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cable One has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Walt Disney

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cable One and Walt Disney

The main advantage of trading using opposite Cable One and Walt Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One position performs unexpectedly, Walt 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 Walt Disney will offset losses from the drop in Walt Disney's long position.

The idea behind Cable One 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.