Correlation Between Disney and Citigroup

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

Diversification Opportunities for Disney and Citigroup

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between Disney and Citigroup is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Disney i.e., Disney and Citigroup go up and down completely randomly.

Pair Corralation between Disney and Citigroup

Considering the 90-day investment horizon Disney is expected to generate 4.19 times less return on investment than Citigroup. In addition to that, Disney is 1.81 times more volatile than Citigroup. It trades about 0.02 of its total potential returns per unit of risk. Citigroup is currently generating about 0.16 per unit of volatility. If you would invest  4,407  in Citigroup on September 4, 2022 and sell it today you would earn a total of  317.00  from holding Citigroup or generate 7.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Walt Disney  vs.  Citigroup

 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

Citigroup 
Citigroup Performance
0 of 100
Over the last 90 days Citigroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Citigroup is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Citigroup Price Channel

Disney and Citigroup Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Citigroup

The main advantage of trading using opposite Disney and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.
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The idea behind Walt Disney and Citigroup 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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