Correlation Between General Employment and Dolby Laboratories

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Can any of the company-specific risk be diversified away by investing in both General Employment and Dolby Laboratories 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 General Employment and Dolby Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Employment Enterprises and Dolby Laboratories, you can compare the effects of market volatilities on General Employment and Dolby Laboratories 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 General Employment with a short position of Dolby Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Employment and Dolby Laboratories.

Diversification Opportunities for General Employment and Dolby Laboratories

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between General and Dolby is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Employment Enterprises and Dolby Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolby Laboratories and General Employment 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 General Employment Enterprises are associated (or correlated) with Dolby Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolby Laboratories has no effect on the direction of General Employment i.e., General Employment and Dolby Laboratories go up and down completely randomly.

Pair Corralation between General Employment and Dolby Laboratories

Considering the 90-day investment horizon General Employment Enterprises is expected to generate 2.93 times more return on investment than Dolby Laboratories. However, General Employment is 2.93 times more volatile than Dolby Laboratories. It trades about 0.01 of its potential returns per unit of risk. Dolby Laboratories is currently generating about -0.02 per unit of risk. If you would invest  113.00  in General Employment Enterprises on August 30, 2022 and sell it today you would lose (36.00)  from holding General Employment Enterprises or give up 31.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

General Employment Enterprises  vs.  Dolby Laboratories

 Performance (%) 
       Timeline  
General Employment 
General Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Employment Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, General Employment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

General Price Channel

Dolby Laboratories 
Dolby Performance
0 of 100
Over the last 90 days Dolby Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Dolby Laboratories is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Dolby Price Channel

General Employment and Dolby Laboratories Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with General Employment and Dolby Laboratories

The main advantage of trading using opposite General Employment and Dolby Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Employment position performs unexpectedly, Dolby Laboratories 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 Dolby Laboratories will offset losses from the drop in Dolby Laboratories' long position.
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The idea behind General Employment Enterprises and Dolby Laboratories 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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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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