Correlation Between Disney and SPC Nickel

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

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

Diversification Opportunities for Disney and SPC Nickel

0.57

Correlation Coefficient

Disney  SPC Nickel

Very weak diversification

The 3 months correlation between Disney and SPC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and SPC Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPC Nickel Corp 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 SPC Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPC Nickel Corp has no effect on the direction of Disney i.e., Disney and SPC Nickel go up and down completely randomly.

Pair Corralation between Disney and SPC Nickel

Considering the 90-day investment horizon Walt Disney is expected to generate 0.88 times more return on investment than SPC Nickel. However, Walt Disney is 1.13 times less risky than SPC Nickel. It trades about -0.03 of its potential returns per unit of risk. SPC Nickel Corp is currently generating about -0.13 per unit of risk. If you would invest  11,664  in Walt Disney on December 1, 2024 and sell it today you would lose (284.00) from holding Walt Disney or give up 2.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Walt Disney  vs.  SPC Nickel Corp

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 comparatively stable forward indicators, Disney is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

SPC Nickel Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPC Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Disney and SPC Nickel

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

The idea behind Walt Disney and SPC Nickel Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.