Correlation Between Disney and Cohen Steers

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

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

Diversification Opportunities for Disney and Cohen Steers

0.52

Correlation Coefficient

Disney  Cohen Steers

Very weak diversification

The 3 months correlation between Disney and Cohen is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Cohen Steers Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Reit 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 Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Reit has no effect on the direction of Disney i.e., Disney and Cohen Steers go up and down completely randomly.

Pair Corralation between Disney and Cohen Steers

Considering the 90-day investment horizon Walt Disney is expected to generate 0.86 times more return on investment than Cohen Steers. However, Walt Disney is 1.16 times less risky than Cohen Steers. It trades about 0.2 of its potential returns per unit of risk. Cohen Steers Reit is currently generating about 0.04 per unit of risk. If you would invest  9,497  in Walt Disney on August 13, 2024 and sell it today you would earn a total of  405.00  from holding Walt Disney or generate 4.26% return on investment over 90 days.

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

Walt Disney  vs.  Cohen Steers Reit

Walt Disney

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cohen Steers Reit

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen Steers Reit are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively fragile basic indicators, Cohen Steers may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Disney and Cohen Steers

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

The idea behind Walt Disney and Cohen Steers Reit 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.