Correlation Between Sphere Entertainment and Abcellera Biologics

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

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

Diversification Opportunities for Sphere Entertainment and Abcellera Biologics

-0.4

Correlation Coefficient

Sphere Entertainment  Abcellera Biologics

Very good diversification

The 3 months correlation between Sphere and Abcellera is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Abcellera Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abcellera Biologics and Sphere Entertainment 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 Sphere Entertainment Co are associated (or correlated) with Abcellera Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abcellera Biologics has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Abcellera Biologics go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Abcellera Biologics

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Abcellera Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Sphere Entertainment Co is 1.42 times less risky than Abcellera Biologics. The stock trades about -0.05 of its potential returns per unit of risk. The Abcellera Biologics is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  315.00  in Abcellera Biologics on October 10, 2024 and sell it today you would lose (12.00) from holding Abcellera Biologics or give up 3.81% of portfolio value over 90 days.

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

Sphere Entertainment Co  vs.  Abcellera Biologics

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.

Abcellera Biologics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abcellera Biologics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Abcellera Biologics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sphere Entertainment and Abcellera Biologics

The main advantage of trading using opposite Sphere Entertainment and Abcellera Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Abcellera Biologics 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 Abcellera Biologics will offset losses from the drop in Abcellera Biologics' long position.

The idea behind Sphere Entertainment Co and Abcellera Biologics 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.