Correlation Between United Breweries and Walt Disney

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

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

Diversification Opportunities for United Breweries and Walt Disney

-0.42

Correlation Coefficient

United Breweries  Walt Disney

Very good diversification

The 3 months correlation between United and Walt is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and United Breweries 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 United Breweries Co 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 United Breweries i.e., United Breweries and Walt Disney go up and down completely randomly.

Pair Corralation between United Breweries and Walt Disney

Assuming the 90 days trading horizon United Breweries Co is expected to generate 1.27 times more return on investment than Walt Disney. However, United Breweries is 1.27 times more volatile than The Walt Disney. It trades about 0.43 of its potential returns per unit of risk. The Walt Disney is currently generating about -0.03 per unit of risk. If you would invest  1,130  in United Breweries Co on December 4, 2024 and sell it today you would earn a total of  180.00  from holding United Breweries Co or generate 15.93% return on investment over 90 days.

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

United Breweries Co  vs.  The Walt Disney

United Breweries

Risk-Adjusted Performance

Solid

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

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. In spite of comparatively stable basic indicators, Walt Disney is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with United Breweries and Walt Disney

The main advantage of trading using opposite United Breweries and Walt Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries 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 United Breweries Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.