Correlation Between Disney and Credit Agricole

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

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

Diversification Opportunities for Disney and Credit Agricole

-0.88

Correlation Coefficient

Disney  Credit Agricole

Pay attention - limited upside

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

Pair Corralation between Disney and Credit Agricole

Considering the 90-day investment horizon Walt Disney is expected to generate 1.12 times more return on investment than Credit Agricole. However, Disney is 1.12 times more volatile than Credit Agricole SA. It trades about 0.01 of its potential returns per unit of risk. Credit Agricole SA is currently generating about -0.05 per unit of risk. If you would invest  11,594  in Walt Disney on September 3, 2024 and sell it today you would earn a total of  153.00  from holding Walt Disney or generate 1.32% return on investment over 90 days.

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

Walt Disney  vs.  Credit Agricole SA

Walt Disney

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 24 (%) 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.

Credit Agricole SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credit Agricole SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Disney and Credit Agricole

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

The idea behind Walt Disney and Credit Agricole SA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.