Correlation Between Walt Disney and Global X

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

By analyzing existing cross correlation between The Walt Disney and Global X Funds, you can compare the effects of market volatilities on Walt Disney and Global X 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 Walt Disney with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walt Disney and Global X.

Diversification Opportunities for Walt Disney and Global X

0.92

Correlation Coefficient

Walt Disney  Global X

Almost no diversification

The 3 months correlation between Walt and Global is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding The Walt Disney and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and Walt 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 The Walt Disney are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Walt Disney i.e., Walt Disney and Global X go up and down completely randomly.

Pair Corralation between Walt Disney and Global X

Assuming the 90 days trading horizon The Walt Disney is expected to generate 0.57 times more return on investment than Global X. However, The Walt Disney is 1.76 times less risky than Global X. It trades about -0.13 of its potential returns per unit of risk. Global X Funds is currently generating about -0.08 per unit of risk. If you would invest  4,588  in The Walt Disney on October 10, 2024 and sell it today you would lose (139.00) from holding The Walt Disney or give up 3.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

The Walt Disney  vs.  Global X Funds

Walt Disney

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Walt Disney are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Walt Disney sustained solid returns over the last few months and may actually be approaching a breakup point.

Global X Funds

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Walt Disney and Global X

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

The idea behind The Walt Disney and Global X Funds 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.