Correlation Between Walt Disney and Cresud Wnt

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

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

Diversification Opportunities for Walt Disney and Cresud Wnt

0.3

Correlation Coefficient

Walt Disney  Cresud Wnt

Weak diversification

The 3 months correlation between Walt and Cresud is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Cresud Wnt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud Wnt 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 Walt Disney are associated (or correlated) with Cresud Wnt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud Wnt has no effect on the direction of Walt Disney i.e., Walt Disney and Cresud Wnt go up and down completely randomly.

Pair Corralation between Walt Disney and Cresud Wnt

Assuming the 90 days trading horizon Walt Disney is expected to generate 0.4 times more return on investment than Cresud Wnt. However, Walt Disney is 2.48 times less risky than Cresud Wnt. It trades about -0.01 of its potential returns per unit of risk. Cresud Wnt is currently generating about -0.08 per unit of risk. If you would invest  1,087,500  in Walt Disney on December 22, 2024 and sell it today you would lose (17,500) from holding Walt Disney or give up 1.61% of portfolio value over 90 days.

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

Walt Disney  vs.  Cresud Wnt

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. Despite somewhat strong basic indicators, Walt Disney is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cresud Wnt

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cresud Wnt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Walt Disney and Cresud Wnt

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

The idea behind Walt Disney and Cresud Wnt 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.