Correlation Between Walt Disney and Camuzzi Gas

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

By analyzing existing cross correlation between Walt Disney and Camuzzi Gas Pampeana, you can compare the effects of market volatilities on Walt Disney and Camuzzi Gas 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 Walt Disney with a short position of Camuzzi Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walt Disney and Camuzzi Gas.

Diversification Opportunities for Walt Disney and Camuzzi Gas

0.76

Correlation Coefficient

Walt Disney  Camuzzi Gas

Poor diversification

The 3 months correlation between Walt and Camuzzi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Camuzzi Gas Pampeana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camuzzi Gas Pampeana and Walt 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 Camuzzi Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camuzzi Gas Pampeana has no effect on the direction of Walt Disney i.e., Walt Disney and Camuzzi Gas go up and down completely randomly.

Pair Corralation between Walt Disney and Camuzzi Gas

Assuming the 90 days trading horizon Walt Disney is expected to generate 6.93 times less return on investment than Camuzzi Gas. But when comparing it to its historical volatility, Walt Disney is 2.41 times less risky than Camuzzi Gas. It trades about 0.09 of its potential returns per unit of risk. Camuzzi Gas Pampeana is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  202,000  in Camuzzi Gas Pampeana on September 16, 2024 and sell it today you would earn a total of  149,500  from holding Camuzzi Gas Pampeana or generate 74.01% 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.  Camuzzi Gas Pampeana

Walt Disney

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Walt Disney may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Camuzzi Gas Pampeana

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Camuzzi Gas Pampeana are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Camuzzi Gas sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walt Disney and Camuzzi Gas

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

The idea behind Walt Disney and Camuzzi Gas Pampeana 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.