Correlation Between Disney and Bolsa Mexicana

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

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

Diversification Opportunities for Disney and Bolsa Mexicana

0.13

Correlation Coefficient

Disney  Bolsa Mexicana

Average diversification

The 3 months correlation between Disney and Bolsa is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding The Walt Disney and Bolsa Mexicana de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolsa Mexicana de and Disney 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 The Walt Disney are associated (or correlated) with Bolsa Mexicana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolsa Mexicana de has no effect on the direction of Disney i.e., Disney and Bolsa Mexicana go up and down completely randomly.

Pair Corralation between Disney and Bolsa Mexicana

Assuming the 90 days trading horizon The Walt Disney is expected to generate 0.59 times more return on investment than Bolsa Mexicana. However, The Walt Disney is 1.7 times less risky than Bolsa Mexicana. It trades about -0.09 of its potential returns per unit of risk. Bolsa Mexicana de is currently generating about -0.18 per unit of risk. 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

The Walt Disney  vs.  Bolsa Mexicana de

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.

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.

Pair Trading with Disney and Bolsa Mexicana

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

The idea behind The Walt Disney and Bolsa Mexicana de 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.