Correlation Between Disney and Eos Energy

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

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

Diversification Opportunities for Disney and Eos Energy

0.53

Correlation Coefficient

Disney  Eos Energy

Very weak diversification

The 3 months correlation between Disney and Eos is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Eos Energy Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eos Energy Enterprises 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 Eos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eos Energy Enterprises has no effect on the direction of Disney i.e., Disney and Eos Energy go up and down completely randomly.

Pair Corralation between Disney and Eos Energy

Considering the 90-day investment horizon Walt Disney is expected to generate 0.21 times more return on investment than Eos Energy. However, Walt Disney is 4.73 times less risky than Eos Energy. It trades about -0.12 of its potential returns per unit of risk. Eos Energy Enterprises is currently generating about -0.03 per unit of risk. If you would invest  11,155  in Walt Disney on December 27, 2024 and sell it today you would lose (1,111) from holding Walt Disney or give up 9.96% of portfolio value over 90 days.

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

Walt Disney  vs.  Eos Energy Enterprises

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 conflicting 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.

Eos Energy Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eos Energy Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Disney and Eos Energy

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

The idea behind Walt Disney and Eos Energy Enterprises 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.