Correlation Between Disney and STF Tactical

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

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

Diversification Opportunities for Disney and STF Tactical

0.81

Correlation Coefficient

Disney  STF Tactical

Very poor diversification

The 3 months correlation between Disney and STF is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and STF Tactical Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STF Tactical Growth 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 STF Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STF Tactical Growth has no effect on the direction of Disney i.e., Disney and STF Tactical go up and down completely randomly.

Pair Corralation between Disney and STF Tactical

Considering the 90-day investment horizon Walt Disney is expected to under-perform the STF Tactical. In addition to that, Disney is 1.04 times more volatile than STF Tactical Growth. It trades about -0.11 of its total potential returns per unit of risk. STF Tactical Growth is currently generating about -0.07 per unit of volatility. If you would invest  2,411  in STF Tactical Growth on December 26, 2024 and sell it today you would lose (141.00) from holding STF Tactical Growth or give up 5.85% of portfolio value over 90 days.

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

Walt Disney  vs.  STF Tactical Growth

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.

STF Tactical Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days STF Tactical Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, STF Tactical is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Disney and STF Tactical

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

The idea behind Walt Disney and STF Tactical Growth 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.