Correlation Between Disney and Mount Logan

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

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

Diversification Opportunities for Disney and Mount Logan

-0.56

Correlation Coefficient

Disney  Mount Logan

Excellent diversification

The 3 months correlation between Disney and Mount is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Mount Logan Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Logan Capital 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 Mount Logan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Logan Capital has no effect on the direction of Disney i.e., Disney and Mount Logan go up and down completely randomly.

Pair Corralation between Disney and Mount Logan

Considering the 90-day investment horizon Walt Disney is expected to generate 2.77 times more return on investment than Mount Logan. However, Disney is 2.77 times more volatile than Mount Logan Capital. It trades about 0.08 of its potential returns per unit of risk. Mount Logan Capital is currently generating about -0.08 per unit of risk. If you would invest  10,230  in Walt Disney on August 30, 2024 and sell it today you would earn a total of  1,530  from holding Walt Disney or generate 14.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.03%
Values	Daily Returns

Walt Disney  vs.  Mount Logan Capital

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.

Mount Logan Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mount Logan Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Mount Logan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Disney and Mount Logan

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

The idea behind Walt Disney and Mount Logan Capital 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.

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 the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.