Correlation Between Disney and Innovid Corp

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

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

Diversification Opportunities for Disney and Innovid Corp

0.64

Correlation Coefficient

Disney  Innovid Corp

Poor diversification

The 3 months correlation between Disney and Innovid is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Innovid Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovid Corp 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 Innovid Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovid Corp has no effect on the direction of Disney i.e., Disney and Innovid Corp go up and down completely randomly.

Pair Corralation between Disney and Innovid Corp

Considering the 90-day investment horizon Disney is expected to generate 3.97 times less return on investment than Innovid Corp. But when comparing it to its historical volatility, Walt Disney is 5.82 times less risky than Innovid Corp. It trades about 0.08 of its potential returns per unit of risk. Innovid Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  227.00  in Innovid Corp on August 30, 2024 and sell it today you would earn a total of  77.00  from holding Innovid Corp or generate 33.92% return on investment over 90 days.

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

Walt Disney  vs.  Innovid Corp

Walt Disney

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Innovid Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovid Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Innovid Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Disney and Innovid Corp

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

The idea behind Walt Disney and Innovid Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.