Correlation Between Disney and Global X

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

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

Diversification Opportunities for Disney and Global X

0.58

Correlation Coefficient

Disney  Global X

Very weak diversification

The 3 months correlation between Disney and Global is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Disney i.e., Disney and Global X go up and down completely randomly.

Pair Corralation between Disney and Global X

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Global X. In addition to that, Disney is 1.2 times more volatile than Global X Funds. It trades about -0.11 of its total potential returns per unit of risk. Global X Funds is currently generating about -0.03 per unit of volatility. If you would invest  2,660  in Global X Funds on December 28, 2024 and sell it today you would lose (61.00) from holding Global X Funds or give up 2.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Walt Disney  vs.  Global X Funds

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.

Global X Funds

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Disney and Global X

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

The idea behind Walt Disney and Global X Funds 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.