Correlation Between Dolby Laboratories and Performant Financial

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

By analyzing existing cross correlation between Dolby Laboratories and Performant Financial, you can compare the effects of market volatilities on Dolby Laboratories and Performant Financial 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 Dolby Laboratories with a short position of Performant Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolby Laboratories and Performant Financial.

Diversification Opportunities for Dolby Laboratories and Performant Financial

0.58

Correlation Coefficient

Dolby Laboratories  Performant Financial

Very weak diversification

The 3 months correlation between Dolby and Performant is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dolby Laboratories and Performant Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performant Financial and Dolby Laboratories 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 Dolby Laboratories are associated (or correlated) with Performant Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performant Financial has no effect on the direction of Dolby Laboratories i.e., Dolby Laboratories and Performant Financial go up and down completely randomly.

Pair Corralation between Dolby Laboratories and Performant Financial

Considering the 90-day investment horizon Dolby Laboratories is expected to generate 4.77 times less return on investment than Performant Financial. But when comparing it to its historical volatility, Dolby Laboratories is 2.53 times less risky than Performant Financial. It trades about 0.01 of its potential returns per unit of risk. Performant Financial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  264.00  in Performant Financial on February 24, 2024 and sell it today you would earn a total of  45.00  from holding Performant Financial or generate 17.05% return on investment over 90 days.

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

Dolby Laboratories  vs.  Performant Financial

Dolby Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolby Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Dolby Laboratories is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Performant Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Performant Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Performant Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dolby Laboratories and Performant Financial

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

The idea behind Dolby Laboratories and Performant Financial 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.