Correlation Between Disney and Camping World

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

Diversification Opportunities for Disney and Camping World

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Disney and Camping is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Camping World Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camping World Holdings 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 Camping World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camping World Holdings has no effect on the direction of Disney i.e., Disney and Camping World go up and down completely randomly.

Pair Corralation between Disney and Camping World

Considering the 90-day investment horizon Walt Disney is expected to under-perform the Camping World. But the stock apears to be less risky and, when comparing its historical volatility, Walt Disney is 1.66 times less risky than Camping World. The stock trades about -0.05 of its potential returns per unit of risk. The Camping World Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,581  in Camping World Holdings on August 29, 2022 and sell it today you would earn a total of  211.00  from holding Camping World Holdings or generate 8.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Walt Disney  vs.  Camping World Holdings

 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

Camping World Holdings 
Camping Performance
0 of 100
Over the last 90 days Camping World Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Camping World is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Camping Price Channel

Disney and Camping World Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Camping World

The main advantage of trading using opposite Disney and Camping World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Camping World 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 Camping World will offset losses from the drop in Camping World's long position.
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The idea behind Walt Disney and Camping World Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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