Correlation Between Disney and Qinetiq Group

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

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

Diversification Opportunities for Disney and Qinetiq Group

-0.51

Correlation Coefficient

Disney  Qinetiq Group

Excellent diversification

The 3 months correlation between Disney and Qinetiq is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Qinetiq Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qinetiq Group PLC 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 Qinetiq Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qinetiq Group PLC has no effect on the direction of Disney i.e., Disney and Qinetiq Group go up and down completely randomly.

Pair Corralation between Disney and Qinetiq Group

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Qinetiq Group. But the stock apears to be less risky and, when comparing its historical volatility, Walt Disney is 3.26 times less risky than Qinetiq Group. The stock trades about -0.11 of its potential returns per unit of risk. The Qinetiq Group PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,059  in Qinetiq Group PLC on December 26, 2024 and sell it today you would lose (93.00) from holding Qinetiq Group PLC or give up 4.52% of portfolio value over 90 days.

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

Walt Disney  vs.  Qinetiq Group PLC

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.

Qinetiq Group PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qinetiq Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Qinetiq Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Disney and Qinetiq Group

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

The idea behind Walt Disney and Qinetiq Group PLC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.