Correlation Between Walt Disney and CTS Eventim

Can any of the company-specific risk be diversified away by investing in both Walt Disney and CTS Eventim 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 CTS Eventim 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 CTS Eventim AG, you can compare the effects of market volatilities on Walt Disney and CTS Eventim 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 CTS Eventim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walt Disney and CTS Eventim.

Diversification Opportunities for Walt Disney and CTS Eventim

-0.3

Correlation Coefficient

Walt Disney  CTS Eventim

Very good diversification

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

Pair Corralation between Walt Disney and CTS Eventim

Assuming the 90 days horizon The Walt Disney is expected to under-perform the CTS Eventim. But the stock apears to be less risky and, when comparing its historical volatility, The Walt Disney is 1.17 times less risky than CTS Eventim. The stock trades about -0.13 of its potential returns per unit of risk. The CTS Eventim AG is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  8,165  in CTS Eventim AG on December 29, 2024 and sell it today you would earn a total of  1,375  from holding CTS Eventim AG or generate 16.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

The Walt Disney  vs.  CTS Eventim AG

Walt Disney

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CTS Eventim AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Eventim AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, CTS Eventim unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walt Disney and CTS Eventim

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

The idea behind The Walt Disney and CTS Eventim AG 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.