Correlation Between Disney and 532457BZ0

Can any of the company-specific risk be diversified away by investing in both Disney and 532457BZ0 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 532457BZ0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walt Disney and ELI LILLY AND, you can compare the effects of market volatilities on Disney and 532457BZ0 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 532457BZ0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and 532457BZ0.

Diversification Opportunities for Disney and 532457BZ0

-0.29

Correlation Coefficient

Disney  532457BZ0

Very good diversification

The 3 months correlation between Disney and 532457BZ0 is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and ELI LILLY AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELI LILLY AND 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 532457BZ0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELI LILLY AND has no effect on the direction of Disney i.e., Disney and 532457BZ0 go up and down completely randomly.

Pair Corralation between Disney and 532457BZ0

Considering the 90-day investment horizon Disney is expected to generate 1.25 times less return on investment than 532457BZ0. But when comparing it to its historical volatility, Walt Disney is 1.01 times less risky than 532457BZ0. It trades about 0.01 of its potential returns per unit of risk. ELI LILLY AND is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,719  in ELI LILLY AND on October 22, 2024 and sell it today you would earn a total of  86.00  from holding ELI LILLY AND or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.47%
Values	Daily Returns

Walt Disney  vs.  ELI LILLY AND

Walt Disney

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ELI LILLY AND

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ELI LILLY AND are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 532457BZ0 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Disney and 532457BZ0

The main advantage of trading using opposite Disney and 532457BZ0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, 532457BZ0 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 532457BZ0 will offset losses from the drop in 532457BZ0's long position.

The idea behind Walt Disney and ELI LILLY AND 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.