Correlation Between Logitech International and Disney

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

Diversification Opportunities for Logitech International and Disney

-0.27
  Correlation Coefficient

Very good diversification

The 1 month correlation between Logitech and Disney is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Logitech International SA and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Logitech International 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 Logitech International SA are associated (or correlated) with Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Logitech International i.e., Logitech International and Disney go up and down completely randomly.

Pair Corralation between Logitech International and Disney

Given the investment horizon of 90 days Logitech International SA is expected to generate 0.76 times more return on investment than Disney. However, Logitech International SA is 1.31 times less risky than Disney. It trades about 0.28 of its potential returns per unit of risk. Walt Disney is currently generating about -0.01 per unit of risk. If you would invest  5,344  in Logitech International SA on September 6, 2022 and sell it today you would earn a total of  930.00  from holding Logitech International SA or generate 17.4% return on investment over 90 days.
Time Period1 Month [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Logitech International SA  vs.  Walt Disney

 Performance (%) 
       Timeline  
Logitech International 
Logitech Performance
21 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Logitech International SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Logitech International reported solid returns over the last few months and may actually be approaching a breakup point.

Logitech Price Channel

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 relatively invariable forward indicators, Disney is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Disney Price Channel

Logitech International and Disney Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Logitech International and Disney

The main advantage of trading using opposite Logitech International and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logitech International position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.
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The idea behind Logitech International SA and Walt Disney 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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