Correlation Between Dolphin Entertainment and Live Nation

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

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

Diversification Opportunities for Dolphin Entertainment and Live Nation

-0.77

Correlation Coefficient

Dolphin Entertainment  Live Nation

Pay attention - limited upside

The 3 months correlation between Dolphin and Live is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Entertainment and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment 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 Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of Dolphin Entertainment i.e., Dolphin Entertainment and Live Nation go up and down completely randomly.

Pair Corralation between Dolphin Entertainment and Live Nation

Given the investment horizon of 90 days Dolphin Entertainment is expected to under-perform the Live Nation. In addition to that, Dolphin Entertainment is 2.7 times more volatile than Live Nation Entertainment. It trades about -0.08 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.37 per unit of volatility. If you would invest  9,767  in Live Nation Entertainment on August 30, 2024 and sell it today you would earn a total of  4,206  from holding Live Nation Entertainment or generate 43.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Dolphin Entertainment  vs.  Live Nation Entertainment

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 December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Live Nation Entertainment

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Live Nation showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dolphin Entertainment and Live Nation

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

The idea behind Dolphin Entertainment and Live Nation 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.