Correlation Between Disney and Duck Creek

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

Diversification Opportunities for Disney and Duck Creek

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Disney and Duck Creek is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Duck Creek Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duck Creek Technologies 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 Duck Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duck Creek Technologies has no effect on the direction of Disney i.e., Disney and Duck Creek go up and down completely randomly.

Pair Corralation between Disney and Duck Creek

Considering the 90-day investment horizon Walt Disney is expected to generate 1.08 times more return on investment than Duck Creek. However, Disney is 1.08 times more volatile than Duck Creek Technologies. It trades about -0.07 of its potential returns per unit of risk. Duck Creek Technologies is currently generating about -0.11 per unit of risk. If you would invest  10,595  in Walt Disney on August 29, 2022 and sell it today you would lose (708.00)  from holding Walt Disney or give up 6.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Walt Disney  vs.  Duck Creek Technologies

 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

Duck Creek Technologies 
Duck Creek Performance
0 of 100
Over the last 90 days Duck Creek Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Duck Creek is not utilizing all of its potentials. The new stock price uproar, may contribute to short-horizon losses for the private investors.

Duck Creek Price Channel

Disney and Duck Creek Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Duck Creek

The main advantage of trading using opposite Disney and Duck Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Duck Creek 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 Duck Creek will offset losses from the drop in Duck Creek's long position.
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The idea behind Walt Disney and Duck Creek Technologies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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