Correlation Between AMERICAN FUNDS and Disney

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

Diversification Opportunities for AMERICAN FUNDS and Disney

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between AMERICAN and Disney is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding AMERICAN FUNDS FUNDAMENTAL and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and AMERICAN FUNDS 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 AMERICAN FUNDS FUNDAMENTAL 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 AMERICAN FUNDS i.e., AMERICAN FUNDS and Disney go up and down completely randomly.

Pair Corralation between AMERICAN FUNDS and Disney

Assuming the 90 days horizon AMERICAN FUNDS FUNDAMENTAL is expected to generate 0.63 times more return on investment than Disney. However, AMERICAN FUNDS FUNDAMENTAL is 1.6 times less risky than Disney. It trades about -0.03 of its potential returns per unit of risk. Walt Disney is currently generating about -0.07 per unit of risk. If you would invest  7,169  in AMERICAN FUNDS FUNDAMENTAL on September 9, 2022 and sell it today you would lose (929.00)  from holding AMERICAN FUNDS FUNDAMENTAL or give up 12.96% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

AMERICAN FUNDS FUNDAMENTAL  vs.  Walt Disney

 Performance (%) 
       Timeline  
AMERICAN FUNDS FUNDA 
AMERICAN Performance
0 of 100
Over the last 90 days AMERICAN FUNDS FUNDAMENTAL has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, AMERICAN FUNDS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AMERICAN 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 abnormal performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in January 2023. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Disney Price Channel

AMERICAN FUNDS and Disney Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AMERICAN FUNDS and Disney

The main advantage of trading using opposite AMERICAN FUNDS and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMERICAN FUNDS 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 AMERICAN FUNDS FUNDAMENTAL 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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