Correlation Between Disney and Semiconductor Bear

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Can any of the company-specific risk be diversified away by investing in both Disney and Semiconductor Bear 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 Semiconductor Bear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Semiconductor Bear 3X, you can compare the effects of market volatilities on Disney and Semiconductor Bear 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 Semiconductor Bear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Semiconductor Bear.

Diversification Opportunities for Disney and Semiconductor Bear

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Disney and Semiconductor is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Semiconductor Bear 3X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Bear 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 Semiconductor Bear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semiconductor Bear has no effect on the direction of Disney i.e., Disney and Semiconductor Bear go up and down completely randomly.

Pair Corralation between Disney and Semiconductor Bear

Considering the 90-day investment horizon Walt Disney is expected to generate 0.35 times more return on investment than Semiconductor Bear. However, Walt Disney is 2.89 times less risky than Semiconductor Bear. It trades about 0.01 of its potential returns per unit of risk. Semiconductor Bear 3X is currently generating about -0.12 per unit of risk. If you would invest  9,745  in Walt Disney on August 30, 2022 and sell it today you would lose (131.00)  from holding Walt Disney or give up 1.34% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Walt Disney  vs.  Semiconductor Bear 3X

 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

Semiconductor Bear 
Semiconductor Performance
0 of 100
Over the last 90 days Semiconductor Bear 3X has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest sluggish performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Semiconductor Price Channel

Disney and Semiconductor Bear Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Disney and Semiconductor Bear

The main advantage of trading using opposite Disney and Semiconductor Bear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Semiconductor Bear 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 Semiconductor Bear will offset losses from the drop in Semiconductor Bear's long position.
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The idea behind Walt Disney and Semiconductor Bear 3X 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 Valuation module to check real value of public entities based on technical and fundamental data.

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