Correlation Between Dolphin Entertainment and ICU Medical

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

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

Diversification Opportunities for Dolphin Entertainment and ICU Medical

0.24

Correlation Coefficient

Dolphin Entertainment  ICU Medical

Modest diversification

The 3 months correlation between Dolphin and ICU is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Entertainment and ICU Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICU Medical 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 ICU Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICU Medical has no effect on the direction of Dolphin Entertainment i.e., Dolphin Entertainment and ICU Medical go up and down completely randomly.

Pair Corralation between Dolphin Entertainment and ICU Medical

Given the investment horizon of 90 days Dolphin Entertainment is expected to under-perform the ICU Medical. In addition to that, Dolphin Entertainment is 2.38 times more volatile than ICU Medical. It trades about -0.06 of its total potential returns per unit of risk. ICU Medical is currently generating about 0.01 per unit of volatility. If you would invest  16,309  in ICU Medical on September 2, 2024 and sell it today you would earn a total of  87.00  from holding ICU Medical or generate 0.53% return on investment over 90 days.

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

Dolphin Entertainment  vs.  ICU Medical

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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

ICU Medical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ICU Medical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, ICU Medical is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Dolphin Entertainment and ICU Medical

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

The idea behind Dolphin Entertainment and ICU Medical 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.