Correlation Between Cumulus Media and Disney

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

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

Diversification Opportunities for Cumulus Media and Disney

-0.87

Correlation Coefficient

Cumulus Media  Disney

Pay attention - limited upside

The 3 months correlation between Cumulus and Disney is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Cumulus Media 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 Cumulus Media 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 Cumulus Media i.e., Cumulus Media and Disney go up and down completely randomly.

Pair Corralation between Cumulus Media and Disney

Given the investment horizon of 90 days Cumulus Media Class is expected to generate 6.06 times more return on investment than Disney. However, Cumulus Media is 6.06 times more volatile than Walt Disney. It trades about 0.04 of its potential returns per unit of risk. Walt Disney is currently generating about -0.2 per unit of risk. If you would invest  76.00  in Cumulus Media Class on October 8, 2024 and sell it today you would earn a total of  1.00  from holding Cumulus Media Class or generate 1.32% return on investment over 90 days.

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

Cumulus Media Class  vs.  Walt Disney

Cumulus Media Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cumulus Media Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Walt Disney

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cumulus Media and Disney

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