Correlation Between Dolby Laboratories and Lions Gate
Can any of the company-specific risk be diversified away by investing in both Dolby Laboratories and Lions Gate 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 Lions Gate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dolby Laboratories and Lions Gate Entertainment, you can compare the effects of market volatilities on Dolby Laboratories and Lions Gate 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 Lions Gate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolby Laboratories and Lions Gate.
Diversification Opportunities for Dolby Laboratories and Lions Gate
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dolby and Lions is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dolby Laboratories and Lions Gate Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lions Gate Entertainment 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 Lions Gate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lions Gate Entertainment has no effect on the direction of Dolby Laboratories i.e., Dolby Laboratories and Lions Gate go up and down completely randomly.
Pair Corralation between Dolby Laboratories and Lions Gate
Assuming the 90 days horizon Dolby Laboratories is expected to generate 0.5 times more return on investment than Lions Gate. However, Dolby Laboratories is 1.98 times less risky than Lions Gate. It trades about -0.01 of its potential returns per unit of risk. Lions Gate Entertainment is currently generating about -0.01 per unit of risk. If you would invest 8,014 in Dolby Laboratories on September 2, 2024 and sell it today you would lose (614.00) from holding Dolby Laboratories or give up 7.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dolby Laboratories vs. Lions Gate Entertainment
Performance |
| Timeline |
| Dolby Laboratories |
| Lions Gate Entertainment |
Dolby Laboratories and Lions Gate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dolby Laboratories and Lions Gate
The main advantage of trading using opposite Dolby Laboratories and Lions Gate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dolby Laboratories position performs unexpectedly, Lions Gate 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 Lions Gate will offset losses from the drop in Lions Gate's long position.| Dolby Laboratories vs. Caltagirone SpA | Dolby Laboratories vs. CECO ENVIRONMENTAL | Dolby Laboratories vs. NIPPON STEEL SPADR | Dolby Laboratories vs. Tower One Wireless |
| Lions Gate vs. Wizz Air Holdings | Lions Gate vs. DELTA AIR LINES | Lions Gate vs. FORWARD AIR P | Lions Gate vs. ALTAIR RES INC |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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