Correlation Between Disney and AULT Old

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

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

Diversification Opportunities for Disney and AULT Old

-0.68

Correlation Coefficient

Disney  AULT Old

Excellent diversification

The 3 months correlation between Disney and AULT is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and AULT Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AULT Old 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 AULT Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AULT Old has no effect on the direction of Disney i.e., Disney and AULT Old go up and down completely randomly.

Pair Corralation between Disney and AULT Old

Considering the 90-day investment horizon Walt Disney is expected to generate 0.2 times more return on investment than AULT Old. However, Walt Disney is 5.05 times less risky than AULT Old. It trades about 0.02 of its potential returns per unit of risk. AULT Old is currently generating about -0.2 per unit of risk. If you would invest  10,222  in Walt Disney on October 11, 2024 and sell it today you would earn a total of  754.00  from holding Walt Disney or generate 7.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	83.27%
Values	Daily Returns

Walt Disney  vs.  AULT Old

Walt Disney

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

AULT Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AULT Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, AULT Old is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Disney and AULT Old

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

The idea behind Walt Disney and AULT Old 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.