Correlation Between Disney and Dada Nexus
Can any of the company-specific risk be diversified away by investing in both Disney and Dada Nexus 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 Dada Nexus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Dada Nexus, you can compare the effects of market volatilities on Disney and Dada Nexus 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 Dada Nexus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Dada Nexus.
Diversification Opportunities for Disney and Dada Nexus
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Disney and Dada is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Dada Nexus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dada Nexus 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 Dada Nexus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dada Nexus has no effect on the direction of Disney i.e., Disney and Dada Nexus go up and down completely randomly.
Pair Corralation between Disney and Dada Nexus
Considering the 90-day investment horizon Walt Disney is expected to generate 0.26 times more return on investment than Dada Nexus. However, Walt Disney is 3.8 times less risky than Dada Nexus. It trades about -0.17 of its potential returns per unit of risk. Dada Nexus is currently generating about -0.21 per unit of risk. If you would invest 11,936 in Walt Disney on January 25, 2024 and sell it today you would lose (544.00) from holding Walt Disney or give up 4.56% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Walt Disney vs. Dada Nexus
Performance |
Timeline |
Walt Disney |
Dada Nexus |
Disney and Dada Nexus Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Disney and Dada Nexus
The main advantage of trading using opposite Disney and Dada Nexus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Dada Nexus 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 Dada Nexus will offset losses from the drop in Dada Nexus' long position.Disney vs. Roku Inc | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery | Disney vs. Paramount Global Class |
Dada Nexus vs. Sea | Dada Nexus vs. Vipshop Holdings Limited | Dada Nexus vs. Amazon Inc | Dada Nexus vs. JD Inc Adr |
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 the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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