Correlation Between Disney and Capstone Green

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

Diversification Opportunities for Disney and Capstone Green

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Disney and Capstone is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Capstone Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Green Energy 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 Capstone Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Green Energy has no effect on the direction of Disney i.e., Disney and Capstone Green go up and down completely randomly.

Pair Corralation between Disney and Capstone Green

If you would invest  20.00  in Capstone Green Energy on February 23, 2024 and sell it today you would earn a total of  0.00  from holding Capstone Green Energy or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy4.35%
ValuesDaily Returns

Walt Disney  vs.  Capstone Green Energy

 Performance 
       Timeline  
Walt Disney 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 current stock price uproar, may contribute to short-horizon losses for the private investors.
Capstone Green Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Capstone Green Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Capstone Green is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Disney and Capstone Green Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Capstone Green

The main advantage of trading using opposite Disney and Capstone Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Capstone Green 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 Capstone Green will offset losses from the drop in Capstone Green's long position.
The idea behind Walt Disney and Capstone Green Energy 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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