Correlation Between Disney and Abeona Therapeutics

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

Diversification Opportunities for Disney and Abeona Therapeutics

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Disney and Abeona is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Abeona Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abeona Therapeutics 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 Abeona Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abeona Therapeutics has no effect on the direction of Disney i.e., Disney and Abeona Therapeutics go up and down completely randomly.

Pair Corralation between Disney and Abeona Therapeutics

Considering the 90-day investment horizon Walt Disney is expected to generate 0.35 times more return on investment than Abeona Therapeutics. However, Walt Disney is 2.84 times less risky than Abeona Therapeutics. It trades about -0.12 of its potential returns per unit of risk. Abeona Therapeutics is currently generating about -0.1 per unit of risk. If you would invest  13,858  in Walt Disney on July 2, 2022 and sell it today you would lose (4,113)  from holding Walt Disney or give up 29.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Walt Disney  vs.  Abeona Therapeutics

 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 relatively invariable forward indicators, Disney is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Disney Price Channel

Abeona Therapeutics 
Abeona Performance
0 of 100
Over the last 90 days Abeona Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in October 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Abeona Price Channel

Disney and Abeona Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Abeona Therapeutics

The main advantage of trading using opposite Disney and Abeona Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Abeona Therapeutics 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 Abeona Therapeutics will offset losses from the drop in Abeona Therapeutics' long position.
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The idea behind Walt Disney and Abeona Therapeutics 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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