Correlation Between Global E and Sphere Entertainment

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

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

Diversification Opportunities for Global E and Sphere Entertainment

-0.85

Correlation Coefficient

Global E  Sphere Entertainment

Pay attention - limited upside

The 3 months correlation between Global and Sphere is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Global E 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 Global E Online 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 Global E i.e., Global E and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Global E and Sphere Entertainment

Given the investment horizon of 90 days Global E Online is expected to generate 0.7 times more return on investment than Sphere Entertainment. However, Global E Online is 1.43 times less risky than Sphere Entertainment. It trades about 0.16 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.15 per unit of risk. If you would invest  5,228  in Global E Online on September 29, 2024 and sell it today you would earn a total of  273.00  from holding Global E Online or generate 5.22% return on investment over 90 days.

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

Global E Online  vs.  Sphere Entertainment Co

Global E Online

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental drivers, Global E exhibited 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 unsteady performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Global E and Sphere Entertainment

The main advantage of trading using opposite Global E and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E 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 Global E Online 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.