Correlation Between Disney and Progressive Planet

Can any of the company-specific risk be diversified away by investing in both Disney and Progressive Planet 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 Progressive Planet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walt Disney and Progressive Planet Solutions, you can compare the effects of market volatilities on Disney and Progressive Planet 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 Progressive Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Progressive Planet.

Diversification Opportunities for Disney and Progressive Planet

0.9

Correlation Coefficient

Disney  Progressive Planet

Almost no diversification

The 3 months correlation between Disney and Progressive is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Progressive Planet Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Planet 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 Progressive Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive Planet has no effect on the direction of Disney i.e., Disney and Progressive Planet go up and down completely randomly.

Pair Corralation between Disney and Progressive Planet

Considering the 90-day investment horizon Disney is expected to generate 2.49 times less return on investment than Progressive Planet. But when comparing it to its historical volatility, Walt Disney is 4.64 times less risky than Progressive Planet. It trades about 0.31 of its potential returns per unit of risk. Progressive Planet Solutions is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  7.30  in Progressive Planet Solutions on September 2, 2024 and sell it today you would earn a total of  5.70  from holding Progressive Planet Solutions or generate 78.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Walt Disney  vs.  Progressive Planet Solutions

Walt Disney

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Progressive Planet

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Planet Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Progressive Planet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Disney and Progressive Planet

The main advantage of trading using opposite Disney and Progressive Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Progressive Planet 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 Progressive Planet will offset losses from the drop in Progressive Planet's long position.

The idea behind Walt Disney and Progressive Planet Solutions 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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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 the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.