Correlation Between Ab Global and Disney

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

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

Diversification Opportunities for Ab Global and Disney

0.07

Correlation Coefficient

Ab Global  Disney

Significant diversification

The 3 months correlation between ANACX and Disney is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Bond and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Ab Global 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 Ab Global Bond 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 Ab Global i.e., Ab Global and Disney go up and down completely randomly.

Pair Corralation between Ab Global and Disney

Assuming the 90 days horizon Ab Global Bond is expected to under-perform the Disney. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ab Global Bond is 4.38 times less risky than Disney. The mutual fund trades about -0.13 of its potential returns per unit of risk. The The Walt Disney is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  193,883  in The Walt Disney on January 20, 2024 and sell it today you would earn a total of  112.00  from holding The Walt Disney or generate 0.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Ab Global Bond  vs.  The Walt Disney

Ab Global Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Global Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Ab Global 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

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Walt Disney are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Disney showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ab Global and Disney

The main advantage of trading using opposite Ab Global and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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 Ab Global Bond 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.