Correlation Between Live Nation and Dolphin Entertainment

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

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

Diversification Opportunities for Live Nation and Dolphin Entertainment

-0.12

Correlation Coefficient

Live Nation  Dolphin Entertainment

Good diversification

The 3 months correlation between Live and Dolphin is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Dolphin Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Entertainment and Live Nation 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 Live Nation Entertainment 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 Live Nation i.e., Live Nation and Dolphin Entertainment go up and down completely randomly.

Pair Corralation between Live Nation and Dolphin Entertainment

Considering the 90-day investment horizon Live Nation Entertainment is expected to under-perform the Dolphin Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Live Nation Entertainment is 2.1 times less risky than Dolphin Entertainment. The stock trades about -0.13 of its potential returns per unit of risk. The Dolphin Entertainment is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  140.00  in Dolphin Entertainment on February 1, 2024 and sell it today you would lose (15.00) from holding Dolphin Entertainment or give up 10.71% of portfolio value over 90 days.

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

Live Nation Entertainment  vs.  Dolphin Entertainment

Live Nation Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Nation Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Live Nation is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated 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 latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Live Nation and Dolphin Entertainment

The main advantage of trading using opposite Live Nation and Dolphin Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation 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 Live Nation Entertainment 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.