Correlation Between Sphere Entertainment and AmTrust Financial

Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and AmTrust Financial 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 AmTrust Financial 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 AmTrust Financial Services, you can compare the effects of market volatilities on Sphere Entertainment and AmTrust Financial 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 AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and AmTrust Financial.

Diversification Opportunities for Sphere Entertainment and AmTrust Financial

-0.67

Correlation Coefficient

Sphere Entertainment  AmTrust Financial

Excellent diversification

The 3 months correlation between Sphere and AmTrust is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial 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 AmTrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmTrust Financial has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and AmTrust Financial go up and down completely randomly.

Pair Corralation between Sphere Entertainment and AmTrust Financial

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the AmTrust Financial. But the stock apears to be less risky and, when comparing its historical volatility, Sphere Entertainment Co is 1.28 times less risky than AmTrust Financial. The stock trades about -0.15 of its potential returns per unit of risk. The AmTrust Financial Services is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,460  in AmTrust Financial Services on September 29, 2024 and sell it today you would lose (55.00) from holding AmTrust Financial Services or give up 3.77% of portfolio value over 90 days.

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

Sphere Entertainment Co  vs.  AmTrust Financial Services

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

AmTrust Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AmTrust Financial Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, AmTrust Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Sphere Entertainment and AmTrust Financial

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

The idea behind Sphere Entertainment Co and AmTrust Financial Services 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.