Correlation Between National Beverage and Sphere Entertainment

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

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

Diversification Opportunities for National Beverage and Sphere Entertainment

-0.37

Correlation Coefficient

National Beverage  Sphere Entertainment

Very good diversification

The 3 months correlation between National and Sphere is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Sphere Entertainment go up and down completely randomly.

Pair Corralation between National Beverage and Sphere Entertainment

Given the investment horizon of 90 days National Beverage is expected to generate 2.87 times less return on investment than Sphere Entertainment. But when comparing it to its historical volatility, National Beverage Corp is 1.56 times less risky than Sphere Entertainment. It trades about 0.01 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,368  in Sphere Entertainment Co on September 12, 2024 and sell it today you would earn a total of  314.00  from holding Sphere Entertainment Co or generate 9.32% return on investment over 90 days.

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

National Beverage Corp  vs.  Sphere Entertainment Co

National Beverage Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Beverage Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, National Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sphere Entertainment

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with National Beverage and Sphere Entertainment

The main advantage of trading using opposite National Beverage and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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 National Beverage Corp 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.

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 the Commodity Directory module to find actively traded commodities issued by global exchanges.