Correlation Between Revolve Group and Sphere Entertainment

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

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

Diversification Opportunities for Revolve Group and Sphere Entertainment

-0.74

Correlation Coefficient

Revolve Group  Sphere Entertainment

Pay attention - limited upside

The 3 months correlation between Revolve and Sphere is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Revolve Group 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 Revolve Group 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 Revolve Group 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 Revolve Group i.e., Revolve Group and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Revolve Group and Sphere Entertainment

Given the investment horizon of 90 days Revolve Group LLC is expected to generate 2.0 times more return on investment than Sphere Entertainment. However, Revolve Group is 2.0 times more volatile than Sphere Entertainment Co. It trades about 0.06 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.1 per unit of risk. If you would invest  2,583  in Revolve Group LLC on October 15, 2024 and sell it today you would earn a total of  320.50  from holding Revolve Group LLC or generate 12.41% return on investment over 90 days.

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

Revolve Group LLC  vs.  Sphere Entertainment Co

Revolve Group LLC

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Revolve Group LLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Revolve Group 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 weak performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Revolve Group and Sphere Entertainment

The main advantage of trading using opposite Revolve Group and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Revolve Group 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 Revolve Group 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 CEOs Directory module to screen CEOs from public companies around the world.