Correlation Between News Corp and Sphere Entertainment

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

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

Diversification Opportunities for News Corp and Sphere Entertainment

0.75

Correlation Coefficient

News Corp  Sphere Entertainment

Poor diversification

The 3 months correlation between News and Sphere is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding News Corp A and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and News Corp 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 News Corp A 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 News Corp i.e., News Corp and Sphere Entertainment go up and down completely randomly.

Pair Corralation between News Corp and Sphere Entertainment

Given the investment horizon of 90 days News Corp is expected to generate 1.04 times less return on investment than Sphere Entertainment. But when comparing it to its historical volatility, News Corp A is 2.38 times less risky than Sphere Entertainment. It trades about 0.07 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  2,680  in Sphere Entertainment Co on December 28, 2024 and sell it today you would earn a total of  694.00  from holding Sphere Entertainment Co or generate 25.9% return on investment over 90 days.

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

News Corp A  vs.  Sphere Entertainment Co

News Corp A

Risk-Adjusted Performance

Very Weak

Over the last 90 days News Corp A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, News Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Sphere Entertainment

Risk-Adjusted Performance

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 conflicting performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with News Corp and Sphere Entertainment

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