Correlation Between Scholastic and Sphere Entertainment

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

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

Diversification Opportunities for Scholastic and Sphere Entertainment

0.08

Correlation Coefficient

Scholastic  Sphere Entertainment

Significant diversification

The 3 months correlation between Scholastic and Sphere is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Scholastic 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 Scholastic 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 Scholastic i.e., Scholastic and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Scholastic and Sphere Entertainment

Given the investment horizon of 90 days Scholastic is expected to generate 0.97 times more return on investment than Sphere Entertainment. However, Scholastic is 1.03 times less risky than Sphere Entertainment. It trades about -0.02 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.21 per unit of risk. If you would invest  2,533  in Scholastic on September 21, 2024 and sell it today you would lose (68.00) from holding Scholastic or give up 2.68% of portfolio value over 90 days.

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

Scholastic  vs.  Sphere Entertainment Co

Scholastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scholastic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 latest unfluctuating performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Scholastic and Sphere Entertainment

The main advantage of trading using opposite Scholastic and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scholastic 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 Scholastic 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.