Correlation Between Bank of New York and Sphere Entertainment

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

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

Diversification Opportunities for Bank of New York and Sphere Entertainment

0.48

Correlation Coefficient

Bank of New York  Sphere Entertainment

Very weak diversification

The 3 months correlation between Bank and Sphere is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Bank of New York 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 Bank of New are associated (or correlated) with Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of Bank of New York i.e., Bank of New York and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Bank of New York and Sphere Entertainment

Allowing for the 90-day total investment horizon Bank of New is expected to generate 0.52 times more return on investment than Sphere Entertainment. However, Bank of New is 1.92 times less risky than Sphere Entertainment. It trades about 0.09 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.06 per unit of risk. If you would invest  7,599  in Bank of New on December 19, 2024 and sell it today you would earn a total of  665.00  from holding Bank of New or generate 8.75% return on investment over 90 days.

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

Bank of New  vs.  Sphere Entertainment Co

Bank of New York

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of New are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Bank of New York may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sphere Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sphere Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Bank of New York and Sphere Entertainment

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

The idea behind Bank of New and Sphere Entertainment Co 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.