Correlation Between Disney and Ab International

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

By analyzing existing cross correlation between Walt Disney and Ab International Value, you can compare the effects of market volatilities on Disney and Ab International 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 Ab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Ab International.

Diversification Opportunities for Disney and Ab International

-0.88

Correlation Coefficient

Disney  Ab International

Pay attention - limited upside

The 3 months correlation between Disney and ABIAX is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Ab International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab International Value 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 Walt Disney are associated (or correlated) with Ab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab International Value has no effect on the direction of Disney i.e., Disney and Ab International go up and down completely randomly.

Pair Corralation between Disney and Ab International

Considering the 90-day investment horizon Walt Disney is expected to generate 1.83 times more return on investment than Ab International. However, Disney is 1.83 times more volatile than Ab International Value. It trades about 0.02 of its potential returns per unit of risk. Ab International Value is currently generating about 0.01 per unit of risk. If you would invest  9,819  in Walt Disney on October 4, 2024 and sell it today you would earn a total of  1,263  from holding Walt Disney or generate 12.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Walt Disney  vs.  Ab International Value

Walt Disney

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 14 (%) 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.

Ab International Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab International Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Disney and Ab International

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

The idea behind Walt Disney and Ab International Value 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.