Correlation Between NextNav Warrant and Sphere Entertainment

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

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

Diversification Opportunities for NextNav Warrant and Sphere Entertainment

-0.76

Correlation Coefficient

NextNav Warrant  Sphere Entertainment

Pay attention - limited upside

The 3 months correlation between NextNav and Sphere is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding NextNav Warrant and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and NextNav Warrant 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 NextNav Warrant 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 NextNav Warrant i.e., NextNav Warrant and Sphere Entertainment go up and down completely randomly.

Pair Corralation between NextNav Warrant and Sphere Entertainment

Assuming the 90 days horizon NextNav Warrant is expected to under-perform the Sphere Entertainment. In addition to that, NextNav Warrant is 2.61 times more volatile than Sphere Entertainment Co. It trades about -0.16 of its total potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.05 per unit of volatility. If you would invest  4,105  in Sphere Entertainment Co on December 2, 2024 and sell it today you would earn a total of  258.00  from holding Sphere Entertainment Co or generate 6.29% return on investment over 90 days.

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

NextNav Warrant  vs.  Sphere Entertainment Co

NextNav Warrant

Risk-Adjusted Performance

Very Weak

Over the last 90 days NextNav Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sphere Entertainment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sphere Entertainment Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical indicators, Sphere Entertainment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NextNav Warrant and Sphere Entertainment

The main advantage of trading using opposite NextNav Warrant and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextNav Warrant 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 NextNav Warrant 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.