Correlation Between Disney and William Penn

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

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

Diversification Opportunities for Disney and William Penn

0.11

Correlation Coefficient

Disney  William Penn

Average diversification

The 3 months correlation between Disney and William is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and William Penn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Penn Bancorp and 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 Walt Disney are associated (or correlated) with William Penn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Penn Bancorp has no effect on the direction of Disney i.e., Disney and William Penn go up and down completely randomly.

Pair Corralation between Disney and William Penn

Considering the 90-day investment horizon Walt Disney is expected to under-perform the William Penn. In addition to that, Disney is 1.65 times more volatile than William Penn Bancorp. It trades about -0.04 of its total potential returns per unit of risk. William Penn Bancorp is currently generating about 0.1 per unit of volatility. If you would invest  1,166  in William Penn Bancorp on February 8, 2024 and sell it today you would earn a total of  71.00  from holding William Penn Bancorp or generate 6.09% return on investment over 90 days.

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

Walt Disney  vs.  William Penn Bancorp

Walt Disney

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Disney is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

William Penn Bancorp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in William Penn Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, William Penn is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Disney and William Penn

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

The idea behind Walt Disney and William Penn Bancorp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.