Correlation Between Disney and IShares Intermediate

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

Diversification Opportunities for Disney and IShares Intermediate

-0.6

Correlation Coefficient

Disney  IShares Intermediate

Excellent diversification

The 3 months correlation between Disney and IShares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and iShares Intermediate Governmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Intermediate 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 Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Intermediate has no effect on the direction of Disney i.e., Disney and IShares Intermediate go up and down completely randomly.

Pair Corralation between Disney and IShares Intermediate

Considering the 90-day investment horizon Walt Disney is expected to under-perform the IShares Intermediate. In addition to that, Disney is 7.78 times more volatile than iShares Intermediate GovernmentCredit. It trades about -0.11 of its total potential returns per unit of risk. iShares Intermediate GovernmentCredit is currently generating about 0.16 per unit of volatility. If you would invest  10,367  in iShares Intermediate GovernmentCredit on December 28, 2024 and sell it today you would earn a total of  186.00  from holding iShares Intermediate GovernmentCredit or generate 1.79% 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 Intermediate Governmen

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.

iShares Intermediate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Intermediate GovernmentCredit are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IShares Intermediate is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Disney and IShares Intermediate

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

The idea behind Walt Disney and iShares Intermediate GovernmentCredit 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 Commodity Directory module to find actively traded commodities issued by global exchanges.