Correlation Between Disney and Comcast Corp

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

By analyzing existing cross correlation between Walt Disney and Comcast Corp, you can compare the effects of market volatilities on Disney and Comcast Corp 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 Comcast Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Comcast Corp.

Diversification Opportunities for Disney and Comcast Corp

-0.59

Correlation Coefficient

Disney  Comcast Corp

Excellent diversification

The 3 months correlation between Disney and Comcast is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Comcast Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast Corp 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 Comcast Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast Corp has no effect on the direction of Disney i.e., Disney and Comcast Corp go up and down completely randomly.

Pair Corralation between Disney and Comcast Corp

Considering the 90-day investment horizon Walt Disney is expected to generate 1.6 times more return on investment than Comcast Corp. However, Disney is 1.6 times more volatile than Comcast Corp. It trades about -0.05 of its potential returns per unit of risk. Comcast Corp is currently generating about -0.46 per unit of risk. If you would invest  11,451  in Walt Disney on January 19, 2024 and sell it today you would lose (208.00) from holding Walt Disney or give up 1.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Walt Disney  vs.  Comcast Corp

Walt Disney

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Comcast Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comcast Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Disney and Comcast Corp

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

The idea behind Walt Disney and Comcast Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.