Correlation Between Disney and GGX Gold

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

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

Diversification Opportunities for Disney and GGX Gold

-0.58

Correlation Coefficient

Disney  GGX Gold

Excellent diversification

The 3 months correlation between Disney and GGX is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and GGX Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GGX Gold 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 GGX Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GGX Gold Corp has no effect on the direction of Disney i.e., Disney and GGX Gold go up and down completely randomly.

Pair Corralation between Disney and GGX Gold

Considering the 90-day investment horizon Disney is expected to generate 3.27 times less return on investment than GGX Gold. But when comparing it to its historical volatility, Walt Disney is 9.44 times less risky than GGX Gold. It trades about 0.09 of its potential returns per unit of risk. GGX Gold Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2.29  in GGX Gold Corp on September 5, 2024 and sell it today you would lose (0.88) from holding GGX Gold Corp or give up 38.43% of portfolio value over 90 days.

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

Walt Disney  vs.  GGX Gold Corp

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 conflicting forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

GGX Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GGX Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Disney and GGX Gold

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

The idea behind Walt Disney and GGX Gold 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.