Correlation Between Disney and NuShares ETF

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

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

Diversification Opportunities for Disney and NuShares ETF

-0.75

Correlation Coefficient

Disney  NuShares ETF

Pay attention - limited upside

The 3 months correlation between Disney and NuShares is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and NuShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuShares ETF Trust 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 NuShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuShares ETF Trust has no effect on the direction of Disney i.e., Disney and NuShares ETF go up and down completely randomly.

Pair Corralation between Disney and NuShares ETF

Considering the 90-day investment horizon Walt Disney is expected to under-perform the NuShares ETF. In addition to that, Disney is 1.02 times more volatile than NuShares ETF Trust. It trades about -0.26 of its total potential returns per unit of risk. NuShares ETF Trust is currently generating about -0.24 per unit of volatility. If you would invest  3,003  in NuShares ETF Trust on October 12, 2024 and sell it today you would lose (104.00) from holding NuShares ETF Trust or give up 3.46% of portfolio value over 90 days.

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

Walt Disney  vs.  NuShares ETF Trust

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 conflicting forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

NuShares ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NuShares ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's technical and fundamental 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 NuShares ETF

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

The idea behind Walt Disney and NuShares ETF Trust 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.