Correlation Between Meta Platforms and Dolphin Entertainment

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Can any of the company-specific risk be diversified away by investing in both Meta Platforms and Dolphin Entertainment 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 Meta Platforms and Dolphin Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and Dolphin Entertainment, you can compare the effects of market volatilities on Meta Platforms and Dolphin Entertainment 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 Meta Platforms with a short position of Dolphin Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and Dolphin Entertainment.

Diversification Opportunities for Meta Platforms and Dolphin Entertainment

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Meta and Dolphin is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and Dolphin Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Entertainment and Meta Platforms 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 Meta Platforms are associated (or correlated) with Dolphin Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Entertainment has no effect on the direction of Meta Platforms i.e., Meta Platforms and Dolphin Entertainment go up and down completely randomly.

Pair Corralation between Meta Platforms and Dolphin Entertainment

Allowing for the 90-day total investment horizon Meta Platforms is expected to under-perform the Dolphin Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Meta Platforms is 1.1 times less risky than Dolphin Entertainment. The stock trades about -0.1 of its potential returns per unit of risk. The Dolphin Entertainment is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  539.00  in Dolphin Entertainment on December 19, 2023 and sell it today you would lose (407.00) from holding Dolphin Entertainment or give up 75.51% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy12.7%
ValuesDaily Returns

Meta Platforms  vs.  Dolphin Entertainment

 Performance 
       Timeline  
Meta Platforms 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Meta Platforms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Meta Platforms is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Dolphin Entertainment 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Dolphin Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Meta Platforms and Dolphin Entertainment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Meta Platforms and Dolphin Entertainment

The main advantage of trading using opposite Meta Platforms and Dolphin Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, Dolphin Entertainment 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 Dolphin Entertainment will offset losses from the drop in Dolphin Entertainment's long position.
The idea behind Meta Platforms and Dolphin Entertainment 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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