Correlation Between Disney and Ivy Advantus

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

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

Diversification Opportunities for Disney and Ivy Advantus

0.72

Correlation Coefficient

Disney  Ivy Advantus

Poor diversification

The 3 months correlation between Disney and Ivy is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Ivy Advantus Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Advantus Bond 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 Ivy Advantus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Advantus Bond has no effect on the direction of Disney i.e., Disney and Ivy Advantus go up and down completely randomly.

Pair Corralation between Disney and Ivy Advantus

Considering the 90-day investment horizon Walt Disney is expected to generate 4.3 times more return on investment than Ivy Advantus. However, Disney is 4.3 times more volatile than Ivy Advantus Bond. It trades about 0.06 of its potential returns per unit of risk. Ivy Advantus Bond is currently generating about 0.02 per unit of risk. If you would invest  8,990  in Walt Disney on October 26, 2024 and sell it today you would earn a total of  2,320  from holding Walt Disney or generate 25.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	57.3%
Values	Daily Returns

Walt Disney  vs.  Ivy Advantus Bond

Walt Disney

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ivy Advantus Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivy Advantus Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Ivy Advantus 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 Ivy Advantus

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

The idea behind Walt Disney and Ivy Advantus Bond 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 Stocks Directory module to find actively traded stocks across global markets.