Correlation Between Disney and PIMCO Investment

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

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

Diversification Opportunities for Disney and PIMCO Investment

-0.02

Correlation Coefficient

Disney  PIMCO Investment

Good diversification

The 3 months correlation between Disney and PIMCO is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and PIMCO Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Investment Grade 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 PIMCO Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Investment Grade has no effect on the direction of Disney i.e., Disney and PIMCO Investment go up and down completely randomly.

Pair Corralation between Disney and PIMCO Investment

Considering the 90-day investment horizon Walt Disney is expected to generate 2.73 times more return on investment than PIMCO Investment. However, Disney is 2.73 times more volatile than PIMCO Investment Grade. It trades about 0.24 of its potential returns per unit of risk. PIMCO Investment Grade is currently generating about -0.05 per unit of risk. If you would invest  9,413  in Walt Disney on August 12, 2024 and sell it today you would earn a total of  489.00  from holding Walt Disney or generate 5.19% return on investment over 90 days.

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

Walt Disney  vs.  PIMCO Investment Grade

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.

PIMCO Investment Grade

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Investment Grade are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, PIMCO Investment is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Disney and PIMCO Investment

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

The idea behind Walt Disney and PIMCO Investment Grade 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.