Correlation Between ChoiceOne Financial and Disney

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Can any of the company-specific risk be diversified away by investing in both ChoiceOne Financial 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 ChoiceOne Financial and Disney into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChoiceOne Financial Services and Walt Disney, you can compare the effects of market volatilities on ChoiceOne Financial 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 ChoiceOne Financial with a short position of Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChoiceOne Financial and Disney.

Diversification Opportunities for ChoiceOne Financial and Disney

  Correlation Coefficient

Very weak diversification

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

Pair Corralation between ChoiceOne Financial and Disney

Given the investment horizon of 90 days ChoiceOne Financial Services is expected to under-perform the Disney. But the stock apears to be less risky and, when comparing its historical volatility, ChoiceOne Financial Services is 1.27 times less risky than Disney. The stock trades about -0.33 of its potential returns per unit of risk. The Walt Disney is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  10,030  in Walt Disney on December 26, 2022 and sell it today you would lose (622.00)  from holding Walt Disney or give up 6.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

ChoiceOne Financial Services  vs.  Walt Disney

 Performance (%) 
ChoiceOne Financial 

ChoiceOne Performance

0 of 100

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

Disney Performance

6 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney may actually be approaching a critical reversion point that can send shares even higher in April 2023.

ChoiceOne Financial and Disney Volatility Contrast

   Predicted Return Density   

Pair Trading with ChoiceOne Financial and Disney

The main advantage of trading using opposite ChoiceOne Financial and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChoiceOne Financial 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.
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The idea behind ChoiceOne Financial Services and 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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Check out your portfolio center. 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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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