Correlation Between Sinclair Broadcast and Disney

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

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

Diversification Opportunities for Sinclair Broadcast and Disney

0.61

Correlation Coefficient

Sinclair Broadcast  Disney

Poor diversification

The 3 months correlation between Sinclair and Disney is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sinclair Broadcast Group and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Sinclair Broadcast 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 Sinclair Broadcast Group are associated (or correlated) with Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Sinclair Broadcast i.e., Sinclair Broadcast and Disney go up and down completely randomly.

Pair Corralation between Sinclair Broadcast and Disney

Given the investment horizon of 90 days Sinclair Broadcast Group is expected to generate 1.72 times more return on investment than Disney. However, Sinclair Broadcast is 1.72 times more volatile than Walt Disney. It trades about 0.19 of its potential returns per unit of risk. Walt Disney is currently generating about 0.31 per unit of risk. If you would invest  1,357  in Sinclair Broadcast Group on September 3, 2024 and sell it today you would earn a total of  430.00  from holding Sinclair Broadcast Group or generate 31.69% return on investment over 90 days.

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

Sinclair Broadcast Group  vs.  Walt Disney

Sinclair Broadcast

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sinclair Broadcast Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Sinclair Broadcast demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Sinclair Broadcast and Disney

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

The idea behind Sinclair Broadcast Group and Walt Disney 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.