Correlation Between Disney and Sonova Holding
Can any of the company-specific risk be diversified away by investing in both Disney and Sonova Holding 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 Sonova Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Sonova Holding AG, you can compare the effects of market volatilities on Disney and Sonova Holding 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 Sonova Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and Sonova Holding.
Diversification Opportunities for Disney and Sonova Holding
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Disney and Sonova is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Sonova Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonova Holding AG 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 Sonova Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonova Holding AG has no effect on the direction of Disney i.e., Disney and Sonova Holding go up and down completely randomly.
Pair Corralation between Disney and Sonova Holding
Considering the 90-day investment horizon Disney is expected to generate 1.01 times less return on investment than Sonova Holding. In addition to that, Disney is 1.04 times more volatile than Sonova Holding AG. It trades about 0.05 of its total potential returns per unit of risk. Sonova Holding AG is currently generating about 0.06 per unit of volatility. If you would invest 5,122 in Sonova Holding AG on September 9, 2024 and sell it today you would earn a total of 1,640 from holding Sonova Holding AG or generate 32.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Walt Disney vs. Sonova Holding AG
Performance |
Timeline |
Walt Disney |
Sonova Holding AG |
Disney and Sonova Holding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Disney and Sonova Holding
The main advantage of trading using opposite Disney and Sonova Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, Sonova Holding 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 Sonova Holding will offset losses from the drop in Sonova Holding's long position.Disney vs. Liberty Media | Disney vs. News Corp B | Disney vs. News Corp A | Disney vs. Madison Square Garden |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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