Correlation Between Dolphin Entertainment and EverQuote

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

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

Diversification Opportunities for Dolphin Entertainment and EverQuote

-0.64

Correlation Coefficient

Dolphin Entertainment  EverQuote

Excellent diversification

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

Pair Corralation between Dolphin Entertainment and EverQuote

Given the investment horizon of 90 days Dolphin Entertainment is expected to under-perform the EverQuote. In addition to that, Dolphin Entertainment is 1.26 times more volatile than EverQuote Class A. It trades about -0.03 of its total potential returns per unit of risk. EverQuote Class A is currently generating about 0.21 per unit of volatility. If you would invest  1,853  in EverQuote Class A on February 2, 2024 and sell it today you would earn a total of  300.00  from holding EverQuote Class A or generate 16.19% return on investment over 90 days.

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

Dolphin Entertainment  vs.  EverQuote Class A

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 weak 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.

EverQuote Class A

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EverQuote Class A are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, EverQuote reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dolphin Entertainment and EverQuote

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

The idea behind Dolphin Entertainment and EverQuote Class A 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.