Correlation Between Disney and Nokia

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

By analyzing existing cross correlation between Walt Disney and Nokia 6625 percent, you can compare the effects of market volatilities on Disney and Nokia 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 Nokia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Nokia.

Diversification Opportunities for Disney and Nokia

0.28

Correlation Coefficient

Disney  Nokia

Modest diversification

The 3 months correlation between Disney and Nokia is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Nokia 6625 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia 6625 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 Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia 6625 percent has no effect on the direction of Disney i.e., Disney and Nokia go up and down completely randomly.

Pair Corralation between Disney and Nokia

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Nokia. But the stock apears to be less risky and, when comparing its historical volatility, Walt Disney is 1.21 times less risky than Nokia. The stock trades about -0.13 of its potential returns per unit of risk. The Nokia 6625 percent is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,159  in Nokia 6625 percent on December 30, 2024 and sell it today you would lose (69.00) from holding Nokia 6625 percent or give up 0.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Walt Disney  vs.  Nokia 6625 percent

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.

Nokia 6625 percent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nokia 6625 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nokia is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Disney and Nokia

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

The idea behind Walt Disney and Nokia 6625 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.