Question 1: Is the average return for Walt Disney stock higher after a drop?
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 3.6% 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 2.8% 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 details 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?
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:
Next N DaysDIS Average ReturnS&P 500 Average Return1 day0.8%0.5%5 days1.1%1.1%10 days1.4%0.9%21 days3.6%3.1%63 days11.1%5.2%126 days20.2%7.4%252 days12%15.6%
You can try the engine to see what this table looks like for Walt Disney after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
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:
Next N DaysDIS Average ReturnS&P 500 Average Return1 day0%-0.3%5 days-0.4%-0.3%10 days1.2%0.1%21 days2.8%0.5%63 days4.6%3.0%126 days8.6%6.6%252 days3.4%11.7%
It's pretty powerful to test the trend for yourself for Walt Disney stock by changing the inputs in the charts above.