Correlation Between Disney and Stadion Tactical

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

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

Diversification Opportunities for Disney and Stadion Tactical

0.86

Correlation Coefficient

Disney  Stadion Tactical

Very poor diversification

The 3 months correlation between Disney and Stadion is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Stadion Tactical Defensive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stadion Tactical Def 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 Stadion Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stadion Tactical Def has no effect on the direction of Disney i.e., Disney and Stadion Tactical go up and down completely randomly.

Pair Corralation between Disney and Stadion Tactical

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Stadion Tactical. In addition to that, Disney is 1.94 times more volatile than Stadion Tactical Defensive. It trades about -0.19 of its total potential returns per unit of risk. Stadion Tactical Defensive is currently generating about -0.18 per unit of volatility. If you would invest  1,570  in Stadion Tactical Defensive on January 26, 2024 and sell it today you would lose (37.00) from holding Stadion Tactical Defensive or give up 2.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Walt Disney  vs.  Stadion Tactical Defensive

Walt Disney

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 12 (%) 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.

Stadion Tactical Def

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stadion Tactical Defensive are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Stadion Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Disney and Stadion Tactical

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

The idea behind Walt Disney and Stadion Tactical Defensive 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.