Correlation Between Dolphin Entertainment and MSP Recovery

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

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

Diversification Opportunities for Dolphin Entertainment and MSP Recovery

0.64

Correlation Coefficient

Dolphin Entertainment  MSP Recovery

Poor diversification

The 3 months correlation between Dolphin and MSP is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Entertainment and MSP Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Recovery and Dolphin Entertainment 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 Dolphin Entertainment are associated (or correlated) with MSP Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Recovery has no effect on the direction of Dolphin Entertainment i.e., Dolphin Entertainment and MSP Recovery go up and down completely randomly.

Pair Corralation between Dolphin Entertainment and MSP Recovery

Given the investment horizon of 90 days Dolphin Entertainment is expected to under-perform the MSP Recovery. But the stock apears to be less risky and, when comparing its historical volatility, Dolphin Entertainment is 3.56 times less risky than MSP Recovery. The stock trades about -0.08 of its potential returns per unit of risk. The MSP Recovery is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  380.00  in MSP Recovery on September 13, 2024 and sell it today you would lose (56.00) from holding MSP Recovery or give up 14.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Dolphin Entertainment  vs.  MSP Recovery

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 abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

MSP Recovery

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MSP Recovery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, MSP Recovery showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dolphin Entertainment and MSP Recovery

The main advantage of trading using opposite Dolphin Entertainment and MSP Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dolphin Entertainment position performs unexpectedly, MSP Recovery 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 MSP Recovery will offset losses from the drop in MSP Recovery's long position.

The idea behind Dolphin Entertainment and MSP Recovery 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.