Correlation Between Dolphin Entertainment and Disney

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

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

Diversification Opportunities for Dolphin Entertainment and Disney

-0.56

Correlation Coefficient

Dolphin Entertainment  Disney

Excellent diversification

The 3 months correlation between Dolphin and Disney is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Entertainment and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Dolphin Entertainment 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 Dolphin Entertainment are associated (or correlated) with Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Dolphin Entertainment i.e., Dolphin Entertainment and Disney go up and down completely randomly.

Pair Corralation between Dolphin Entertainment and Disney

Given the investment horizon of 90 days Dolphin Entertainment is expected to under-perform the Disney. In addition to that, Dolphin Entertainment is 3.09 times more volatile than Walt Disney. It trades about -0.16 of its total potential returns per unit of risk. Walt Disney is currently generating about -0.18 per unit of volatility. If you would invest  11,936  in Walt Disney on January 25, 2024 and sell it today you would lose (565.00) from holding Walt Disney or give up 4.73% of portfolio value over 90 days.

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

Dolphin Entertainment  vs.  Walt Disney

Dolphin Entertainment

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Walt Disney

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 12 (%) 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.

Pair Trading with Dolphin Entertainment and Disney

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

The idea behind Dolphin Entertainment and Walt Disney 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.