Correlation Between Disney and IShares Emerging

Can any of the company-specific risk be diversified away by investing in both Disney and IShares Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Disney and IShares Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and IShares Emerging.

Diversification Opportunities for Disney and IShares Emerging

-0.62

Correlation Coefficient

Disney  IShares Emerging

Excellent diversification

The 3 months correlation between Disney and IShares is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and iShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Emerging Markets has no effect on the direction of Disney i.e., Disney and IShares Emerging go up and down completely randomly.

Pair Corralation between Disney and IShares Emerging

Considering the 90-day investment horizon Walt Disney is expected to generate 1.55 times more return on investment than IShares Emerging. However, Disney is 1.55 times more volatile than iShares Emerging Markets. It trades about 0.02 of its potential returns per unit of risk. iShares Emerging Markets is currently generating about 0.0 per unit of risk. If you would invest  9,783  in Walt Disney on October 9, 2024 and sell it today you would earn a total of  1,322  from holding Walt Disney or generate 13.51% return on investment over 90 days.

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

Walt Disney  vs.  iShares Emerging Markets

Walt Disney

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 16 (%) 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.

iShares Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, IShares Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Disney and IShares Emerging

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

The idea behind Walt Disney and iShares Emerging Markets 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.