Want Double-Digit Returns? Disney Stock Might Not Be Best

Disney stock (NYSE: DIS) increased 23% in the last six months and currently trades near $125 per share. The rise was mainly due to strong performance of its streaming business during the pandemic and the stimulus package announced by the Fed. But will Disney’s stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last 20 years, returns for DIS stock average close to -0.6% in the next one-month (21 trading days) period after experiencing a 23% rise over the previous six-month (126 trading days) period. Notably, though, the stock is likely to underperform the S&P500 over the next month, with an expected return which would be 0.6% lower compared to the S&P500.

But how would these numbers change if you are interested in holding DIS stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test DIS stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!

MACHINE LEARNING ENGINE – try it yourself:

IF DIS stock moved by -5% over 5 trading days, THEN over the next 21 trading days, DIS stock moves an average of 1.3 percent, which implies a return which is 0.4 percent higher than that of the S&P500.

More importantly, there is 58% probability of a positive return over the next 21 trading days and 50% probability of a positive excess return after a -5% change over 5 trading days.

Some Fun Scenarios, FAQs & Making Sense of DIS Stock Movements:

Question 1: Is the average return for Walt Disney stock higher after a drop?

Answer:

Consider two situations,

Case 1: Walt Disney stock drops by -5% or more in a week

Case 2: Walt Disney stock rises by 5% or more in a week

Is the average return for Walt Disney stock higher over the subsequent month after Case 1 or Case 2?

DIS stock fares better after Case 1, with an average return of 1.3% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 1.1% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that shows the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Walt Disney stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Walt Disney stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For DIS stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

DIS’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Walt Disney stock by changing the inputs in the charts above.

What if you’re looking for a more balanced portfolio instead? Here’s a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.

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