Correlation Between Dolphin Entertainment and Nexstar Broadcasting

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

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

Diversification Opportunities for Dolphin Entertainment and Nexstar Broadcasting

-0.04

Correlation Coefficient

Dolphin Entertainment  Nexstar Broadcasting

Good diversification

The 3 months correlation between Dolphin and Nexstar is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Entertainment and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting 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 Nexstar Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Broadcasting has no effect on the direction of Dolphin Entertainment i.e., Dolphin Entertainment and Nexstar Broadcasting go up and down completely randomly.

Pair Corralation between Dolphin Entertainment and Nexstar Broadcasting

Given the investment horizon of 90 days Dolphin Entertainment is expected to generate 1.65 times less return on investment than Nexstar Broadcasting. In addition to that, Dolphin Entertainment is 2.21 times more volatile than Nexstar Broadcasting Group. It trades about 0.03 of its total potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about 0.11 per unit of volatility. If you would invest  15,519  in Nexstar Broadcasting Group on December 29, 2024 and sell it today you would earn a total of  2,126  from holding Nexstar Broadcasting Group or generate 13.7% return on investment over 90 days.

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

Dolphin Entertainment  vs.  Nexstar Broadcasting Group

Dolphin Entertainment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dolphin Entertainment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Dolphin Entertainment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nexstar Broadcasting

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nexstar Broadcasting Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nexstar Broadcasting unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dolphin Entertainment and Nexstar Broadcasting

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

The idea behind Dolphin Entertainment and Nexstar Broadcasting Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.