Correlation Between Disney and Shift4 Payments

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Disney and Shift4 Payments 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 Shift4 Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Shift4 Payments, you can compare the effects of market volatilities on Disney and Shift4 Payments 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 Shift4 Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Shift4 Payments.

Diversification Opportunities for Disney and Shift4 Payments

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Disney and Shift4 is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Shift4 Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shift4 Payments 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 Shift4 Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shift4 Payments has no effect on the direction of Disney i.e., Disney and Shift4 Payments go up and down completely randomly.

Pair Corralation between Disney and Shift4 Payments

Considering the 90-day investment horizon Disney is expected to generate 2.63 times less return on investment than Shift4 Payments. But when comparing it to its historical volatility, Walt Disney is 1.51 times less risky than Shift4 Payments. It trades about 0.36 of its potential returns per unit of risk. Shift4 Payments is currently generating about 0.62 of returns per unit of risk over similar time horizon. If you would invest  3,159  in Shift4 Payments on May 10, 2022 and sell it today you would earn a total of  1,560  from holding Shift4 Payments or generate 49.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Walt Disney  vs.  Shift4 Payments

 Performance (%) 
       Timeline  
Walt Disney 
Disney Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Disney is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Disney Price Channel

Shift4 Payments 
Shift4 Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Shift4 Payments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Shift4 Payments reported solid returns over the last few months and may actually be approaching a breakup point.

Shift4 Price Channel

Disney and Shift4 Payments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Shift4 Payments

The main advantage of trading using opposite Disney and Shift4 Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Shift4 Payments 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 Shift4 Payments will offset losses from the drop in Shift4 Payments' long position.
The idea behind Walt Disney and Shift4 Payments 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.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

Other Complementary Tools

Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
Bond Directory
Find actively traded corporate debentures issued by US companies
Go
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Shere Portfolio
Track or share privately all of your investments from the convenience of any device
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go