Correlation Between Disney and Wejo

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

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

Diversification Opportunities for Disney and Wejo

-0.83

Correlation Coefficient

Disney  Wejo

Pay attention - limited upside

The 3 months correlation between Disney and Wejo is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Wejo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wejo Group 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 Wejo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wejo Group has no effect on the direction of Disney i.e., Disney and Wejo go up and down completely randomly.

Pair Corralation between Disney and Wejo

If you would invest  9,582  in Walt Disney on October 23, 2024 and sell it today you would earn a total of  1,120  from holding Walt Disney or generate 11.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.67%
Values	Daily Returns

Walt Disney  vs.  Wejo Group

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.

Wejo Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wejo Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking indicators, Wejo is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Disney and Wejo

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

The idea behind Walt Disney and Wejo Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..