Correlation Between Disney and Investment Managers

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

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

Diversification Opportunities for Disney and Investment Managers

-0.31

Correlation Coefficient

Disney  Investment Managers

Very good diversification

The 3 months correlation between Disney and Investment is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Investment Managers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Managers 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 Investment Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Managers has no effect on the direction of Disney i.e., Disney and Investment Managers go up and down completely randomly.

Pair Corralation between Disney and Investment Managers

Considering the 90-day investment horizon Walt Disney is expected to generate 0.96 times more return on investment than Investment Managers. However, Walt Disney is 1.04 times less risky than Investment Managers. It trades about -0.17 of its potential returns per unit of risk. Investment Managers Series is currently generating about -0.43 per unit of risk. If you would invest  11,410  in Walt Disney on October 10, 2024 and sell it today you would lose (271.00) from holding Walt Disney or give up 2.38% of portfolio value over 90 days.

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

Walt Disney  vs.  Investment Managers Series

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.

Investment Managers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investment Managers Series has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Disney and Investment Managers

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

The idea behind Walt Disney and Investment Managers Series 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.

Check out your portfolio center.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.