Correlation Between Disney and Invesco High

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

Diversification Opportunities for Disney and Invesco High

0.85

Correlation Coefficient

Disney  Invesco High

Very poor diversification

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

Pair Corralation between Disney and Invesco High

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Invesco High. In addition to that, Disney is 3.16 times more volatile than Invesco High Yield. It trades about -0.25 of its total potential returns per unit of risk. Invesco High Yield is currently generating about -0.12 per unit of volatility. If you would invest  2,268  in Invesco High Yield on October 10, 2024 and sell it today you would lose (13.00) from holding Invesco High Yield or give up 0.57% of portfolio value over 90 days.

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

Walt Disney  vs.  Invesco High Yield

Walt Disney

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 17 (%) 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.

Invesco High Yield

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco High Yield are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Invesco 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 Invesco High

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

The idea behind Walt Disney and Invesco High Yield 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.