Correlation Between Disney and Gamco Global

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

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

Diversification Opportunities for Disney and Gamco Global

0.25

Correlation Coefficient

Disney  Gamco Global

Modest diversification

The 3 months correlation between Disney and Gamco is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Gamco Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamco Global Growth 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 Gamco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamco Global Growth has no effect on the direction of Disney i.e., Disney and Gamco Global go up and down completely randomly.

Pair Corralation between Disney and Gamco Global

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Gamco Global. But the stock apears to be less risky and, when comparing its historical volatility, Walt Disney is 1.18 times less risky than Gamco Global. The stock trades about -0.03 of its potential returns per unit of risk. The Gamco Global Growth is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  6,214  in Gamco Global Growth on December 2, 2024 and sell it today you would lose (116.00) from holding Gamco Global Growth or give up 1.87% of portfolio value over 90 days.

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

Walt Disney  vs.  Gamco Global Growth

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 comparatively stable forward indicators, Disney is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Gamco Global Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gamco Global Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Gamco Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Disney and Gamco Global

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

The idea behind Walt Disney and Gamco Global Growth 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.