Correlation Between Disney and First Pacific

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

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

Diversification Opportunities for Disney and First Pacific

0.54

Correlation Coefficient

Disney  First Pacific

Very weak diversification

The 3 months correlation between Disney and First is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and First Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Pacific 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 First Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Pacific has no effect on the direction of Disney i.e., Disney and First Pacific go up and down completely randomly.

Pair Corralation between Disney and First Pacific

Considering the 90-day investment horizon Walt Disney is expected to generate 0.51 times more return on investment than First Pacific. However, Walt Disney is 1.97 times less risky than First Pacific. It trades about 0.22 of its potential returns per unit of risk. First Pacific is currently generating about 0.03 per unit of risk. If you would invest  9,172  in Walt Disney on May 4, 2025 and sell it today you would earn a total of  2,487  from holding Walt Disney or generate 27.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Walt Disney  vs.  First Pacific

Walt Disney

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 17 (%) 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.

First Pacific

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Pacific are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, First Pacific may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Disney and First Pacific

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

The idea behind Walt Disney and First Pacific 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.