Correlation Between Disney and The Hartford

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

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

Diversification Opportunities for Disney and The Hartford

0.91

Correlation Coefficient

Disney  The Hartford

Almost no diversification

The 3 months correlation between Disney and The is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and The Hartford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth 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 The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth has no effect on the direction of Disney i.e., Disney and The Hartford go up and down completely randomly.

Pair Corralation between Disney and The Hartford

Considering the 90-day investment horizon Walt Disney is expected to generate 1.41 times more return on investment than The Hartford. However, Disney is 1.41 times more volatile than The Hartford Growth. It trades about 0.16 of its potential returns per unit of risk. The Hartford Growth is currently generating about 0.09 per unit of risk. If you would invest  9,536  in Walt Disney on January 26, 2024 and sell it today you would earn a total of  1,856  from holding Walt Disney or generate 19.46% return on investment over 90 days.

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

Walt Disney  vs.  The Hartford Growth

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.

Hartford Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, The Hartford may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Disney and The Hartford

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

The idea behind Walt Disney and The Hartford Growth 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.