Correlation Between Safety Shot and Sphere Entertainment

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

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

Diversification Opportunities for Safety Shot and Sphere Entertainment

0.79

Correlation Coefficient

Safety Shot  Sphere Entertainment

Poor diversification

The 3 months correlation between Safety and Sphere is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Safety Shot and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment and Safety Shot 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 Safety Shot 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 Safety Shot i.e., Safety Shot and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Safety Shot and Sphere Entertainment

Given the investment horizon of 90 days Safety Shot is expected to under-perform the Sphere Entertainment. In addition to that, Safety Shot is 1.51 times more volatile than Sphere Entertainment Co. It trades about -0.31 of its total potential returns per unit of risk. Sphere Entertainment Co is currently generating about 0.24 per unit of volatility. If you would invest  3,785  in Sphere Entertainment Co on October 6, 2024 and sell it today you would earn a total of  461.00  from holding Sphere Entertainment Co or generate 12.18% return on investment over 90 days.

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

Safety Shot  vs.  Sphere Entertainment Co

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 relatively invariable technical indicators, Sphere Entertainment is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Safety Shot and Sphere Entertainment

The main advantage of trading using opposite Safety Shot and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Shot 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 Safety Shot 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.