Correlation Between Disney and New York

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

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

Diversification Opportunities for Disney and New York

-0.83

Correlation Coefficient

Disney  New York

Pay attention - limited upside

The 3 months correlation between Disney and New is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and New York Times in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Times 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 New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Times has no effect on the direction of Disney i.e., Disney and New York go up and down completely randomly.

Pair Corralation between Disney and New York

Considering the 90-day investment horizon Walt Disney is expected to under-perform the New York. In addition to that, Disney is 1.38 times more volatile than New York Times. It trades about -0.15 of its total potential returns per unit of risk. New York Times is currently generating about 0.3 per unit of volatility. If you would invest  4,774  in New York Times on March 9, 2024 and sell it today you would earn a total of  254.00  from holding New York Times or generate 5.32% return on investment over 90 days.

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

Walt Disney  vs.  New York Times

Walt Disney

Risk-Adjusted Performance

0 of 100

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 latest abnormal performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

New York Times

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in New York Times are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, New York unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Disney and New York

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

The idea behind Walt Disney and New York Times 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.