Correlation Between Eros Media and Disney

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

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

Diversification Opportunities for Eros Media and Disney

-0.68

Correlation Coefficient

Eros Media  Disney

Excellent diversification

The 3 months correlation between Eros and Disney is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Eros Media World and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Eros Media 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 Eros Media World are associated (or correlated) with Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Eros Media i.e., Eros Media and Disney go up and down completely randomly.

Pair Corralation between Eros Media and Disney

If you would invest  10.00  in Eros Media World on February 8, 2024 and sell it today you would earn a total of  0.00  from holding Eros Media World or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Eros Media World  vs.  Walt Disney

Eros Media World

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eros Media World has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eros Media is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Walt Disney

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Disney is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eros Media and Disney

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

The idea behind Eros Media World and Walt Disney 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 Directory module to find actively traded commodities issued by global exchanges.