Correlation Between Disney and HUBBELL

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

By analyzing existing cross correlation between Walt Disney and HUBBELL INC 35, you can compare the effects of market volatilities on Disney and HUBBELL 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 HUBBELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and HUBBELL.

Diversification Opportunities for Disney and HUBBELL

-0.35

Correlation Coefficient

Disney  HUBBELL

Very good diversification

The 3 months correlation between Disney and HUBBELL is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and HUBBELL INC 35 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUBBELL INC 35 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 HUBBELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUBBELL INC 35 has no effect on the direction of Disney i.e., Disney and HUBBELL go up and down completely randomly.

Pair Corralation between Disney and HUBBELL

Considering the 90-day investment horizon Walt Disney is expected to under-perform the HUBBELL. In addition to that, Disney is 2.08 times more volatile than HUBBELL INC 35. It trades about -0.26 of its total potential returns per unit of risk. HUBBELL INC 35 is currently generating about -0.29 per unit of volatility. If you would invest  9,667  in HUBBELL INC 35 on October 11, 2024 and sell it today you would lose (192.00) from holding HUBBELL INC 35 or give up 1.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Walt Disney  vs.  HUBBELL INC 35

Walt Disney

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 15 (%) 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.

HUBBELL INC 35

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUBBELL INC 35 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HUBBELL 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 HUBBELL

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

The idea behind Walt Disney and HUBBELL INC 35 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.