Correlation Between Disney and Rock Oak

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

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

Diversification Opportunities for Disney and Rock Oak

0.91

Correlation Coefficient

Disney  Rock Oak

Almost no diversification

The 3 months correlation between Disney and Rock is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Rock Oak E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rock Oak E 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 Rock Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rock Oak E has no effect on the direction of Disney i.e., Disney and Rock Oak go up and down completely randomly.

Pair Corralation between Disney and Rock Oak

Considering the 90-day investment horizon Walt Disney is expected to generate 2.3 times more return on investment than Rock Oak. However, Disney is 2.3 times more volatile than Rock Oak E. It trades about 0.24 of its potential returns per unit of risk. Rock Oak E is currently generating about 0.15 per unit of risk. If you would invest  9,178  in Walt Disney on May 6, 2025 and sell it today you would earn a total of  2,757  from holding Walt Disney or generate 30.04% return on investment over 90 days.

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

Walt Disney  vs.  Rock Oak E

Walt Disney

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Rock Oak E

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rock Oak E are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rock Oak may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Disney and Rock Oak

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

The idea behind Walt Disney and Rock Oak E 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.