Correlation Between Disney and IShares SP

Can any of the company-specific risk be diversified away by investing in both Disney and IShares SP 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 SP 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 SP 500, you can compare the effects of market volatilities on Disney and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and IShares SP.

Diversification Opportunities for Disney and IShares SP

0.56

Correlation Coefficient

Disney  IShares SP

Very weak diversification

The 3 months correlation between Disney and IShares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of Disney i.e., Disney and IShares SP go up and down completely randomly.

Pair Corralation between Disney and IShares SP

Considering the 90-day investment horizon Walt Disney is expected to under-perform the IShares SP. But the stock apears to be less risky and, when comparing its historical volatility, Walt Disney is 1.02 times less risky than IShares SP. The stock trades about -0.11 of its potential returns per unit of risk. The iShares SP 500 is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  10,230  in iShares SP 500 on December 29, 2024 and sell it today you would lose (744.00) from holding iShares SP 500 or give up 7.27% of portfolio value over 90 days.

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

Walt Disney  vs.  iShares SP 500

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 SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Disney and IShares SP

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

The idea behind Walt Disney and iShares SP 500 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.