Correlation Between Walt Disney and Charter Communications

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

Diversification Opportunities for Walt Disney and Charter Communications

0.26

Correlation Coefficient

Walt Disney  Charter Communications

Modest diversification

The 3 months correlation between Walt and Charter is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding The Walt Disney and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Walt Disney i.e., Walt Disney and Charter Communications go up and down completely randomly.

Pair Corralation between Walt Disney and Charter Communications

Assuming the 90 days trading horizon The Walt Disney is expected to under-perform the Charter Communications. But the stock apears to be less risky and, when comparing its historical volatility, The Walt Disney is 1.13 times less risky than Charter Communications. The stock trades about -0.15 of its potential returns per unit of risk. The Charter Communications is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  33,110  in Charter Communications on December 30, 2024 and sell it today you would earn a total of  815.00  from holding Charter Communications or generate 2.46% return on investment over 90 days.

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

The Walt Disney  vs.  Charter Communications

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Charter Communications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Charter Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walt Disney and Charter Communications

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

The idea behind The Walt Disney and Charter Communications 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.