Correlation Between Disney and AMERICAN BEACON

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

Diversification Opportunities for Disney and AMERICAN BEACON

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Disney and AMERICAN is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and AMERICAN BEACON MID-CAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN BEACON MID-CAP 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 AMERICAN BEACON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN BEACON MID-CAP has no effect on the direction of Disney i.e., Disney and AMERICAN BEACON go up and down completely randomly.

Pair Corralation between Disney and AMERICAN BEACON

If you would invest  9,925  in Walt Disney on September 4, 2022 and sell it today you would earn a total of  18.00  from holding Walt Disney or generate 0.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy54.55%
ValuesDaily Returns

Walt Disney  vs.  AMERICAN BEACON MID-CAP

 Performance (%) 
       Timeline  
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 latest weak performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Disney Price Channel

AMERICAN BEACON MID-CAP 
AMERICAN Performance
0 of 100
Over the last 90 days AMERICAN BEACON MID-CAP has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, AMERICAN BEACON may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Disney and AMERICAN BEACON Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and AMERICAN BEACON

The main advantage of trading using opposite Disney and AMERICAN BEACON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, AMERICAN BEACON 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 AMERICAN BEACON will offset losses from the drop in AMERICAN BEACON's long position.
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The idea behind Walt Disney and AMERICAN BEACON MID-CAP 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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