Correlation Between Walt Disney and Apple

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

Diversification Opportunities for Walt Disney and Apple

0.73

Correlation Coefficient

Walt Disney  Apple

Poor diversification

The 3 months correlation between Walt and Apple is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding The Walt Disney and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Walt Disney i.e., Walt Disney and Apple go up and down completely randomly.

Pair Corralation between Walt Disney and Apple

Assuming the 90 days trading horizon The Walt Disney is expected to generate 1.26 times more return on investment than Apple. However, Walt Disney is 1.26 times more volatile than Apple Inc. It trades about 0.17 of its potential returns per unit of risk. Apple Inc is currently generating about 0.04 per unit of risk. If you would invest  8,928  in The Walt Disney on October 23, 2024 and sell it today you would earn a total of  1,510  from holding The Walt Disney or generate 16.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

The Walt Disney  vs.  Apple Inc

Walt Disney

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Walt Disney are ranked lower than 13 (%) 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.

Apple Inc

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Apple is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Walt Disney and Apple

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

The idea behind The Walt Disney and Apple Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.