Correlation Between Dolby Laboratories and LogicMark

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

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

Diversification Opportunities for Dolby Laboratories and LogicMark

-0.6

Correlation Coefficient

Dolby Laboratories  LogicMark

Excellent diversification

The 3 months correlation between Dolby and LogicMark is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dolby Laboratories and LogicMark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LogicMark 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 LogicMark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LogicMark has no effect on the direction of Dolby Laboratories i.e., Dolby Laboratories and LogicMark go up and down completely randomly.

Pair Corralation between Dolby Laboratories and LogicMark

Considering the 90-day investment horizon Dolby Laboratories is expected to generate 0.19 times more return on investment than LogicMark. However, Dolby Laboratories is 5.32 times less risky than LogicMark. It trades about 0.11 of its potential returns per unit of risk. LogicMark is currently generating about -0.05 per unit of risk. If you would invest  6,919  in Dolby Laboratories on September 5, 2024 and sell it today you would earn a total of  1,044  from holding Dolby Laboratories or generate 15.09% return on investment over 90 days.

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

Dolby Laboratories  vs.  LogicMark

Dolby Laboratories

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dolby Laboratories are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Dolby Laboratories sustained solid returns over the last few months and may actually be approaching a breakup point.

LogicMark

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LogicMark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Dolby Laboratories and LogicMark

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

The idea behind Dolby Laboratories and LogicMark 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.