Correlation Between Disney and Bank First

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

Diversification Opportunities for Disney and Bank First

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Disney and Bank First is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Bank First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank First National 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 Bank First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank First National has no effect on the direction of Disney i.e., Disney and Bank First go up and down completely randomly.

Pair Corralation between Disney and Bank First

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Bank First. In addition to that, Disney is 2.04 times more volatile than Bank First National. It trades about -0.07 of its total potential returns per unit of risk. Bank First National is currently generating about 0.37 per unit of volatility. If you would invest  8,580  in Bank First National on August 29, 2022 and sell it today you would earn a total of  1,333  from holding Bank First National or generate 15.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Walt Disney  vs.  Bank First National

 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

Bank First National 
Bank First Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bank First National are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Bank First sustained solid returns over the last few months and may actually be approaching a breakup point.

Bank First Price Channel

Disney and Bank First Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Bank First

The main advantage of trading using opposite Disney and Bank First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Bank First 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 Bank First will offset losses from the drop in Bank First's long position.
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The idea behind Walt Disney and Bank First National 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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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