Correlation Between Disney and KYN Capital

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

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

Diversification Opportunities for Disney and KYN Capital

-0.54

Correlation Coefficient

Disney  KYN Capital

Excellent diversification

The 3 months correlation between Disney and KYN is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and KYN Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYN Capital Group 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 KYN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYN Capital Group has no effect on the direction of Disney i.e., Disney and KYN Capital go up and down completely randomly.

Pair Corralation between Disney and KYN Capital

Considering the 90-day investment horizon Walt Disney is expected to generate 0.15 times more return on investment than KYN Capital. However, Walt Disney is 6.77 times less risky than KYN Capital. It trades about 0.31 of its potential returns per unit of risk. KYN Capital Group is currently generating about 0.03 per unit of risk. If you would invest  8,913  in Walt Disney on September 3, 2024 and sell it today you would earn a total of  2,834  from holding Walt Disney or generate 31.8% return on investment over 90 days.

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

Walt Disney  vs.  KYN Capital Group

Walt Disney

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 24 (%) 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.

KYN Capital Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KYN Capital Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, KYN Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Disney and KYN Capital

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

The idea behind Walt Disney and KYN Capital Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.