Correlation Between Disney and ProShares High

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

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

Diversification Opportunities for Disney and ProShares High

0.85

Correlation Coefficient

Disney  ProShares High

Very poor diversification

The 3 months correlation between Disney and ProShares is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and ProShares High YieldInterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares High Yield 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 ProShares High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares High Yield has no effect on the direction of Disney i.e., Disney and ProShares High go up and down completely randomly.

Pair Corralation between Disney and ProShares High

Considering the 90-day investment horizon Walt Disney is expected to generate 3.74 times more return on investment than ProShares High. However, Disney is 3.74 times more volatile than ProShares High YieldInterest. It trades about 0.04 of its potential returns per unit of risk. ProShares High YieldInterest is currently generating about 0.11 per unit of risk. If you would invest  8,612  in Walt Disney on September 19, 2024 and sell it today you would earn a total of  2,599  from holding Walt Disney or generate 30.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Walt Disney  vs.  ProShares High YieldInterest

Walt Disney

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 16 (%) 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.

ProShares High Yield

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares High YieldInterest are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, ProShares High is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Disney and ProShares High

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

The idea behind Walt Disney and ProShares High YieldInterest 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.