Correlation Between NETGEAR and Sphere Entertainment

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

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

Diversification Opportunities for NETGEAR and Sphere Entertainment

0.48

Correlation Coefficient

NETGEAR  Sphere Entertainment

Very weak diversification

The 3 months correlation between NETGEAR and Sphere is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and NETGEAR 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 NETGEAR 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 NETGEAR i.e., NETGEAR and Sphere Entertainment go up and down completely randomly.

Pair Corralation between NETGEAR and Sphere Entertainment

Given the investment horizon of 90 days NETGEAR is expected to under-perform the Sphere Entertainment. In addition to that, NETGEAR is 1.12 times more volatile than Sphere Entertainment Co. It trades about -0.02 of its total potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.07 per unit of volatility. If you would invest  4,151  in Sphere Entertainment Co on December 2, 2024 and sell it today you would earn a total of  212.00  from holding Sphere Entertainment Co or generate 5.11% return on investment over 90 days.

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

NETGEAR  vs.  Sphere Entertainment Co

NETGEAR

Risk-Adjusted Performance

Insignificant

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

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 NETGEAR and Sphere Entertainment

The main advantage of trading using opposite NETGEAR and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR 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 NETGEAR 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.