Correlation Between Disney and CoreCivic

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

By analyzing existing cross correlation between Walt Disney and CoreCivic 475 percent, you can compare the effects of market volatilities on Disney and CoreCivic 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 CoreCivic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and CoreCivic.

Diversification Opportunities for Disney and CoreCivic

-0.47

Correlation Coefficient

Disney  CoreCivic

Very good diversification

The 3 months correlation between Disney and CoreCivic is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and CoreCivic 475 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCivic 475 percent 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 CoreCivic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCivic 475 percent has no effect on the direction of Disney i.e., Disney and CoreCivic go up and down completely randomly.

Pair Corralation between Disney and CoreCivic

Considering the 90-day investment horizon Walt Disney is expected to generate 0.84 times more return on investment than CoreCivic. However, Walt Disney is 1.18 times less risky than CoreCivic. It trades about 0.25 of its potential returns per unit of risk. CoreCivic 475 percent is currently generating about -0.05 per unit of risk. If you would invest  9,185  in Walt Disney on September 14, 2024 and sell it today you would earn a total of  2,305  from holding Walt Disney or generate 25.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Walt Disney  vs.  CoreCivic 475 percent

Walt Disney

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

CoreCivic 475 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CoreCivic 475 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CoreCivic 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 CoreCivic

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

The idea behind Walt Disney and CoreCivic 475 percent 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.