Correlation Between Biogen and Disney

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

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

Diversification Opportunities for Biogen and Disney

-0.59

Correlation Coefficient

Biogen  Disney

Excellent diversification

The 3 months correlation between Biogen and Disney is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Biogen 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 Biogen Inc 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 Biogen i.e., Biogen and Disney go up and down completely randomly.

Pair Corralation between Biogen and Disney

Assuming the 90 days trading horizon Biogen Inc is expected to under-perform the Disney. But the stock apears to be less risky and, when comparing its historical volatility, Biogen Inc is 2.08 times less risky than Disney. The stock trades about 0.0 of its potential returns per unit of risk. The The Walt Disney is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  177,824  in The Walt Disney on March 12, 2024 and sell it today you would earn a total of  8,890  from holding The Walt Disney or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Biogen Inc  vs.  The Walt Disney

Biogen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Biogen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Walt Disney

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Disney is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Biogen and Disney

The main advantage of trading using opposite Biogen and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen 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 Biogen Inc and The 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.