Correlation Between Disney and Bald Eagle

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

Diversification Opportunities for Disney and Bald Eagle

0.06
  Correlation Coefficient

Significant diversification

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

Pair Corralation between Disney and Bald Eagle

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Bald Eagle. But the stock apears to be less risky and, when comparing its historical volatility, Walt Disney is 1.47 times less risky than Bald Eagle. The stock trades about -0.04 of its potential returns per unit of risk. The Bald Eagle Gold is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  5.74  in Bald Eagle Gold on September 6, 2022 and sell it today you would earn a total of  2.01  from holding Bald Eagle Gold or generate 35.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Walt Disney  vs.  Bald Eagle Gold

 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

Bald Eagle Gold 
BADEF Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bald Eagle Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Bald Eagle exhibited solid returns over the last few months and may actually be approaching a breakup point.

BADEF Price Channel

Disney and Bald Eagle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Bald Eagle

The main advantage of trading using opposite Disney and Bald Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Bald Eagle 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 Bald Eagle will offset losses from the drop in Bald Eagle's long position.
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The idea behind Walt Disney and Bald Eagle Gold 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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