Correlation Between Disney and IShares Core

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

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

Diversification Opportunities for Disney and IShares Core

0.4

Correlation Coefficient

Disney  IShares Core

Very weak diversification

The 3 months correlation between Disney and IShares is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and iShares Core Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Dividend 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Dividend has no effect on the direction of Disney i.e., Disney and IShares Core go up and down completely randomly.

Pair Corralation between Disney and IShares Core

Considering the 90-day investment horizon Walt Disney is expected to under-perform the IShares Core. In addition to that, Disney is 1.97 times more volatile than iShares Core Dividend. It trades about -0.13 of its total potential returns per unit of risk. iShares Core Dividend is currently generating about 0.01 per unit of volatility. If you would invest  6,093  in iShares Core Dividend on December 28, 2024 and sell it today you would earn a total of  22.00  from holding iShares Core Dividend or generate 0.36% return on investment over 90 days.

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

Walt Disney  vs.  iShares Core Dividend

Walt Disney

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

iShares Core Dividend

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Disney and IShares Core

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

The idea behind Walt Disney and iShares Core Dividend 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.