Correlation Between Disney and ANI Pharmaceuticals

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

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

Diversification Opportunities for Disney and ANI Pharmaceuticals

-0.53

Correlation Coefficient

Disney  ANI Pharmaceuticals

Excellent diversification

The 3 months correlation between Disney and ANI is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and ANI Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANI Pharmaceuticals 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 ANI Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANI Pharmaceuticals has no effect on the direction of Disney i.e., Disney and ANI Pharmaceuticals go up and down completely randomly.

Pair Corralation between Disney and ANI Pharmaceuticals

Considering the 90-day investment horizon Walt Disney is expected to under-perform the ANI Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Walt Disney is 2.33 times less risky than ANI Pharmaceuticals. The stock trades about -0.31 of its potential returns per unit of risk. The ANI Pharmaceuticals is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  5,421  in ANI Pharmaceuticals on October 22, 2024 and sell it today you would earn a total of  425.00  from holding ANI Pharmaceuticals or generate 7.84% return on investment over 90 days.

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

Walt Disney  vs.  ANI Pharmaceuticals

Walt Disney

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ANI Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANI Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, ANI Pharmaceuticals is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Disney and ANI Pharmaceuticals

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

The idea behind Walt Disney and ANI Pharmaceuticals 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 Valuation module to check real value of public entities based on technical and fundamental data.