Correlation Between Disney and Comcast

Can any of the company-specific risk be diversified away by investing in both Disney and Comcast 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 Comcast 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 Comcast, you can compare the effects of market volatilities on Disney and Comcast 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 Comcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Comcast.

Diversification Opportunities for Disney and Comcast

0.87

Correlation Coefficient

Disney  Comcast

Very poor diversification

The 3 months correlation between Disney and Comcast is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The Walt Disney and Comcast in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast 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 Comcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast has no effect on the direction of Disney i.e., Disney and Comcast go up and down completely randomly.

Pair Corralation between Disney and Comcast

Assuming the 90 days trading horizon The Walt Disney is expected to generate 0.65 times more return on investment than Comcast. However, The Walt Disney is 1.55 times less risky than Comcast. It trades about 0.06 of its potential returns per unit of risk. Comcast is currently generating about -0.27 per unit of risk. If you would invest  224,146  in The Walt Disney on September 15, 2024 and sell it today you would earn a total of  4,254  from holding The Walt Disney or generate 1.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	42.86%
Values	Daily Returns

The Walt Disney  vs.  Comcast

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 unfluctuating basic indicators, Disney showed solid returns over the last few months and may actually be approaching a breakup point.

Comcast

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comcast are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Comcast may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Disney and Comcast

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

The idea behind The Walt Disney and Comcast 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.