Correlation Between Disney and Clifton Mining

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

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

Diversification Opportunities for Disney and Clifton Mining

-0.61

Correlation Coefficient

Disney  Clifton Mining

Excellent diversification

The 3 months correlation between Disney and Clifton is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Clifton Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clifton Mining 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 Clifton Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clifton Mining has no effect on the direction of Disney i.e., Disney and Clifton Mining go up and down completely randomly.

Pair Corralation between Disney and Clifton Mining

Considering the 90-day investment horizon Disney is expected to generate 12.16 times less return on investment than Clifton Mining. But when comparing it to its historical volatility, Walt Disney is 6.43 times less risky than Clifton Mining. It trades about 0.02 of its potential returns per unit of risk. Clifton Mining Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Clifton Mining Co on October 11, 2024 and sell it today you would lose (8.20) from holding Clifton Mining Co or give up 63.08% of portfolio value over 90 days.

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

Walt Disney  vs.  Clifton Mining Co

Walt Disney

Risk-Adjusted Performance

15 of 100

Solid

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.

Clifton Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clifton Mining Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Clifton Mining is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Disney and Clifton Mining

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

The idea behind Walt Disney and Clifton Mining Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.