Correlation Between Walt Disney and Gladstone Investment

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

Diversification Opportunities for Walt Disney and Gladstone Investment

0.48

Correlation Coefficient

Walt Disney  Gladstone Investment

Very weak diversification

The 3 months correlation between Walt and Gladstone is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Walt Disney and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Walt Disney i.e., Walt Disney and Gladstone Investment go up and down completely randomly.

Pair Corralation between Walt Disney and Gladstone Investment

Assuming the 90 days trading horizon Walt Disney is expected to generate 81.2 times less return on investment than Gladstone Investment. But when comparing it to its historical volatility, The Walt Disney is 1.7 times less risky than Gladstone Investment. It trades about 0.0 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,278  in Gladstone Investment on October 8, 2024 and sell it today you would earn a total of  14.00  from holding Gladstone Investment or generate 1.1% return on investment over 90 days.

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

The Walt Disney  vs.  Gladstone Investment

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. In spite of comparatively fragile basic indicators, Walt Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gladstone Investment

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gladstone Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Walt Disney and Gladstone Investment

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

The idea behind The Walt Disney and Gladstone Investment 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.