Correlation Between Koninklijke Ahold and Disney

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Can any of the company-specific risk be diversified away by investing in both Koninklijke Ahold and Disney 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 Koninklijke Ahold and Disney into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke Ahold NV and Walt Disney, you can compare the effects of market volatilities on Koninklijke Ahold and Disney 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 Koninklijke Ahold with a short position of Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke Ahold and Disney.

Diversification Opportunities for Koninklijke Ahold and Disney

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Koninklijke and Disney is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke Ahold NV and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Koninklijke Ahold 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 Koninklijke Ahold NV are associated (or correlated) with Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Koninklijke Ahold i.e., Koninklijke Ahold and Disney go up and down completely randomly.

Pair Corralation between Koninklijke Ahold and Disney

Assuming the 90 days horizon Koninklijke Ahold NV is expected to generate 0.68 times more return on investment than Disney. However, Koninklijke Ahold NV is 1.47 times less risky than Disney. It trades about 0.1 of its potential returns per unit of risk. Walt Disney is currently generating about 0.02 per unit of risk. If you would invest  2,674  in Koninklijke Ahold NV on August 31, 2022 and sell it today you would earn a total of  220.00  from holding Koninklijke Ahold NV or generate 8.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Koninklijke Ahold NV  vs.  Walt Disney

 Performance (%) 
       Timeline  
Koninklijke Ahold 
Koninklijke Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Koninklijke Ahold may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Koninklijke Price Channel

Walt Disney 
Disney Performance
0 of 100
Over the last 90 days Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in December 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Disney Price Channel

Koninklijke Ahold and Disney Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Koninklijke Ahold and Disney

The main advantage of trading using opposite Koninklijke Ahold and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke Ahold position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.
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The idea behind Koninklijke Ahold NV and Walt Disney 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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