Correlation Between Disney and Yokogawa Electric

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

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

Diversification Opportunities for Disney and Yokogawa Electric

-0.77

Correlation Coefficient

Disney  Yokogawa Electric

Pay attention - limited upside

The 3 months correlation between Disney and Yokogawa is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Yokogawa Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokogawa Electric Corp 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 Yokogawa Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokogawa Electric Corp has no effect on the direction of Disney i.e., Disney and Yokogawa Electric go up and down completely randomly.

Pair Corralation between Disney and Yokogawa Electric

Considering the 90-day investment horizon Walt Disney is expected to generate 0.72 times more return on investment than Yokogawa Electric. However, Walt Disney is 1.38 times less risky than Yokogawa Electric. It trades about 0.31 of its potential returns per unit of risk. Yokogawa Electric Corp is currently generating about -0.17 per unit of risk. If you would invest  8,913  in Walt Disney on September 3, 2024 and sell it today you would earn a total of  2,803  from holding Walt Disney or generate 31.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Walt Disney  vs.  Yokogawa Electric Corp

Walt Disney

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 24 (%) 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.

Yokogawa Electric Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yokogawa Electric Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Disney and Yokogawa Electric

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

The idea behind Walt Disney and Yokogawa Electric Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.