Correlation Between News Corp and Dolphin Entertainment

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

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

Diversification Opportunities for News Corp and Dolphin Entertainment

0.37

Correlation Coefficient

News Corp  Dolphin Entertainment

Weak diversification

The 3 months correlation between News and Dolphin is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding News Corp A and Dolphin Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Entertainment and News Corp 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 News Corp A 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 News Corp i.e., News Corp and Dolphin Entertainment go up and down completely randomly.

Pair Corralation between News Corp and Dolphin Entertainment

Given the investment horizon of 90 days News Corp A is expected to generate 0.33 times more return on investment than Dolphin Entertainment. However, News Corp A is 3.0 times less risky than Dolphin Entertainment. It trades about 0.03 of its potential returns per unit of risk. Dolphin Entertainment is currently generating about -0.03 per unit of risk. If you would invest  2,406  in News Corp A on February 5, 2024 and sell it today you would earn a total of  41.00  from holding News Corp A or generate 1.7% return on investment over 90 days.

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

News Corp A  vs.  Dolphin Entertainment

News Corp A

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp A are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, News Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the 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 News Corp and Dolphin Entertainment

The main advantage of trading using opposite News Corp and Dolphin Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp 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 News Corp A 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.