Correlation Between Disney and IAGLN

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

By analyzing existing cross correlation between Walt Disney and IAGLN 425 15 NOV 32, you can compare the effects of market volatilities on Disney and IAGLN 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 IAGLN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and IAGLN.

Diversification Opportunities for Disney and IAGLN

-0.19

Correlation Coefficient

Disney  IAGLN

Good diversification

The 3 months correlation between Disney and IAGLN is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and IAGLN 425 15 NOV 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAGLN 425 15 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 IAGLN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAGLN 425 15 has no effect on the direction of Disney i.e., Disney and IAGLN go up and down completely randomly.

Pair Corralation between Disney and IAGLN

Considering the 90-day investment horizon Walt Disney is expected to under-perform the IAGLN. In addition to that, Disney is 1.19 times more volatile than IAGLN 425 15 NOV 32. It trades about -0.13 of its total potential returns per unit of risk. IAGLN 425 15 NOV 32 is currently generating about 0.02 per unit of volatility. If you would invest  9,487  in IAGLN 425 15 NOV 32 on December 21, 2024 and sell it today you would earn a total of  33.00  from holding IAGLN 425 15 NOV 32 or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	30.0%
Values	Daily Returns

Walt Disney  vs.  IAGLN 425 15 NOV 32

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.

IAGLN 425 15

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IAGLN 425 15 NOV 32 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IAGLN 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 IAGLN

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

The idea behind Walt Disney and IAGLN 425 15 NOV 32 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.