Correlation Between Disney and Evexx

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

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

Diversification Opportunities for Disney and Evexx

-0.33

Correlation Coefficient

Disney  Evexx

Very good diversification

The 3 months correlation between Disney and Evexx is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Evexx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evexx 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 Evexx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evexx has no effect on the direction of Disney i.e., Disney and Evexx go up and down completely randomly.

Pair Corralation between Disney and Evexx

Considering the 90-day investment horizon Walt Disney is expected to generate 0.04 times more return on investment than Evexx. However, Walt Disney is 23.84 times less risky than Evexx. It trades about -0.26 of its potential returns per unit of risk. Evexx is currently generating about -0.24 per unit of risk. If you would invest  11,422  in Walt Disney on October 11, 2024 and sell it today you would lose (446.00) from holding Walt Disney or give up 3.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Walt Disney  vs.  Evexx

Walt Disney

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 15 (%) 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.

Evexx

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evexx are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Evexx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Disney and Evexx

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

The idea behind Walt Disney and Evexx 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.