Correlation Between GE Vernova and Sphere Entertainment

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

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

Diversification Opportunities for GE Vernova and Sphere Entertainment

-0.53

Correlation Coefficient

GE Vernova  Sphere Entertainment

Excellent diversification

The 3 months correlation between GEV and Sphere is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and GE Vernova 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 GE Vernova LLC 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 GE Vernova i.e., GE Vernova and Sphere Entertainment go up and down completely randomly.

Pair Corralation between GE Vernova and Sphere Entertainment

Considering the 90-day investment horizon GE Vernova LLC is expected to generate 0.91 times more return on investment than Sphere Entertainment. However, GE Vernova LLC is 1.1 times less risky than Sphere Entertainment. It trades about 0.2 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.05 per unit of risk. If you would invest  13,115  in GE Vernova LLC on October 23, 2024 and sell it today you would earn a total of  28,198  from holding GE Vernova LLC or generate 215.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	41.62%
Values	Daily Returns

GE Vernova LLC  vs.  Sphere Entertainment Co

GE Vernova LLC

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.

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 relatively invariable technical indicators, Sphere Entertainment is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with GE Vernova and Sphere Entertainment

The main advantage of trading using opposite GE Vernova and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Vernova 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 GE Vernova LLC 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.