Correlation Between Disney and Aaon

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

Diversification Opportunities for Disney and Aaon

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Disney and Aaon is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Aaon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aaon Inc 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 Aaon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aaon Inc has no effect on the direction of Disney i.e., Disney and Aaon go up and down completely randomly.

Pair Corralation between Disney and Aaon

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Aaon. In addition to that, Disney is 1.0 times more volatile than Aaon Inc. It trades about -0.03 of its total potential returns per unit of risk. Aaon Inc is currently generating about 0.03 per unit of volatility. If you would invest  6,142  in Aaon Inc on August 28, 2022 and sell it today you would earn a total of  1,714  from holding Aaon Inc or generate 27.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.8%
ValuesDaily Returns

Walt Disney  vs.  Aaon Inc

 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

Aaon Inc 
Aaon Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aaon Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Aaon disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aaon Price Channel

Disney and Aaon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Aaon

The main advantage of trading using opposite Disney and Aaon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Aaon 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 Aaon will offset losses from the drop in Aaon's long position.
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The idea behind Walt Disney and Aaon Inc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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