Correlation Between International Media and Dolphin Entertainment

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

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

Diversification Opportunities for International Media and Dolphin Entertainment

-0.49

Correlation Coefficient

International Media  Dolphin Entertainment

Very good diversification

The 3 months correlation between International and Dolphin is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding International Media Acquisitio and Dolphin Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Entertainment and International Media 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 International Media Acquisition 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 International Media i.e., International Media and Dolphin Entertainment go up and down completely randomly.

Pair Corralation between International Media and Dolphin Entertainment

Assuming the 90 days horizon International Media Acquisition is expected to under-perform the Dolphin Entertainment. In addition to that, International Media is 2.3 times more volatile than Dolphin Entertainment. It trades about -0.19 of its total potential returns per unit of risk. Dolphin Entertainment is currently generating about -0.13 per unit of volatility. If you would invest  125.00  in Dolphin Entertainment on March 2, 2024 and sell it today you would lose (14.00) from holding Dolphin Entertainment or give up 11.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	42.86%
Values	Daily Returns

International Media Acquisitio  vs.  Dolphin Entertainment

International Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Media Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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

Pair Trading with International Media and Dolphin Entertainment

The main advantage of trading using opposite International Media and Dolphin Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Media 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 International Media Acquisition 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.