Correlation Between Dolby Laboratories and AutoNation
Can any of the company-specific risk be diversified away by investing in both Dolby Laboratories and AutoNation 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 Dolby Laboratories and AutoNation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dolby Laboratories and AutoNation, you can compare the effects of market volatilities on Dolby Laboratories and AutoNation 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 Dolby Laboratories with a short position of AutoNation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolby Laboratories and AutoNation.
Diversification Opportunities for Dolby Laboratories and AutoNation
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dolby and AutoNation is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dolby Laboratories and AutoNation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AutoNation and Dolby Laboratories 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 Dolby Laboratories are associated (or correlated) with AutoNation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AutoNation has no effect on the direction of Dolby Laboratories i.e., Dolby Laboratories and AutoNation go up and down completely randomly.
Pair Corralation between Dolby Laboratories and AutoNation
Considering the 90-day investment horizon Dolby Laboratories is expected to generate 1.23 times less return on investment than AutoNation. In addition to that, Dolby Laboratories is 1.89 times more volatile than AutoNation. It trades about 0.14 of its total potential returns per unit of risk. AutoNation is currently generating about 0.32 per unit of volatility. If you would invest 15,803 in AutoNation on August 29, 2024 and sell it today you would earn a total of 2,163 from holding AutoNation or generate 13.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dolby Laboratories vs. AutoNation
Performance |
| Timeline |
| Dolby Laboratories |
| AutoNation |
Dolby Laboratories and AutoNation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dolby Laboratories and AutoNation
The main advantage of trading using opposite Dolby Laboratories and AutoNation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dolby Laboratories position performs unexpectedly, AutoNation 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 AutoNation will offset losses from the drop in AutoNation's long position.| Dolby Laboratories vs. Maximus | Dolby Laboratories vs. Network 1 Technologies | Dolby Laboratories vs. First Advantage Corp | Dolby Laboratories vs. BrightView Holdings |
| AutoNation vs. Sonic Automotive | AutoNation vs. Lithia Motors | AutoNation vs. Asbury Automotive Group | AutoNation vs. Penske Automotive Group |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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