Correlation Between MGO Global and Dolphin Entertainment

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

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

Diversification Opportunities for MGO Global and Dolphin Entertainment

0.76

Correlation Coefficient

MGO Global  Dolphin Entertainment

Poor diversification

The 3 months correlation between MGO and Dolphin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MGO Global Common and Dolphin Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Entertainment and MGO Global 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 MGO Global Common are associated (or correlated) with Dolphin Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Entertainment has no effect on the direction of MGO Global i.e., MGO Global and Dolphin Entertainment go up and down completely randomly.

Pair Corralation between MGO Global and Dolphin Entertainment

Given the investment horizon of 90 days MGO Global Common is expected to under-perform the Dolphin Entertainment. In addition to that, MGO Global is 2.05 times more volatile than Dolphin Entertainment. It trades about -0.36 of its total potential returns per unit of risk. Dolphin Entertainment is currently generating about -0.18 per unit of volatility. If you would invest  139.00  in Dolphin Entertainment on January 29, 2024 and sell it today you would lose (19.00) from holding Dolphin Entertainment or give up 13.67% of portfolio value over 90 days.

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

MGO Global Common  vs.  Dolphin Entertainment

MGO Global Common

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGO Global Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with MGO Global and Dolphin Entertainment

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

The idea behind MGO Global Common and Dolphin Entertainment 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 Stocks Directory module to find actively traded stocks across global markets.