Correlation Between Dolby Laboratories and PENN NATL
Can any of the company-specific risk be diversified away by investing in both Dolby Laboratories and PENN NATL 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 PENN NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dolby Laboratories and PENN NATL GAMING, you can compare the effects of market volatilities on Dolby Laboratories and PENN NATL 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 PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolby Laboratories and PENN NATL.
Diversification Opportunities for Dolby Laboratories and PENN NATL
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dolby and PENN is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dolby Laboratories and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING 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 PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of Dolby Laboratories i.e., Dolby Laboratories and PENN NATL go up and down completely randomly.
Pair Corralation between Dolby Laboratories and PENN NATL
Assuming the 90 days horizon Dolby Laboratories is expected to generate 0.48 times more return on investment than PENN NATL. However, Dolby Laboratories is 2.1 times less risky than PENN NATL. It trades about 0.03 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about -0.01 per unit of risk. If you would invest 6,241 in Dolby Laboratories on September 12, 2024 and sell it today you would earn a total of 1,259 from holding Dolby Laboratories or generate 20.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dolby Laboratories vs. PENN NATL GAMING
Performance |
| Timeline |
| Dolby Laboratories |
| PENN NATL GAMING |
Dolby Laboratories and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dolby Laboratories and PENN NATL
The main advantage of trading using opposite Dolby Laboratories and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dolby Laboratories position performs unexpectedly, PENN NATL 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 PENN NATL will offset losses from the drop in PENN NATL's long position.| Dolby Laboratories vs. Live Nation Entertainment | Dolby Laboratories vs. Toho Co | Dolby Laboratories vs. Superior Plus Corp | Dolby Laboratories vs. NMI Holdings |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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