Correlation Between Disney and Starwin Media

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

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

Diversification Opportunities for Disney and Starwin Media

0.0

Correlation Coefficient

Disney  Starwin Media

Pay attention - limited upside

The 3 months correlation between Disney and Starwin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Starwin Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starwin Media Holdings 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 Starwin Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starwin Media Holdings has no effect on the direction of Disney i.e., Disney and Starwin Media go up and down completely randomly.

Pair Corralation between Disney and Starwin Media

If you would invest  9,498  in Walt Disney on October 24, 2024 and sell it today you would earn a total of  1,204  from holding Walt Disney or generate 12.68% return on investment over 90 days.

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

Walt Disney  vs.  Starwin Media Holdings

Walt Disney

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 11 (%) 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.

Starwin Media Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starwin Media Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Starwin Media is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Disney and Starwin Media

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

The idea behind Walt Disney and Starwin Media Holdings 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.