Correlation Between Sphere Entertainment and Allegiant Travel
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Allegiant Travel 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 Allegiant Travel 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 Allegiant Travel, you can compare the effects of market volatilities on Sphere Entertainment and Allegiant Travel 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 Allegiant Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Allegiant Travel.
Diversification Opportunities for Sphere Entertainment and Allegiant Travel
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sphere and Allegiant is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Allegiant Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Travel 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 Allegiant Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegiant Travel has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Allegiant Travel go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Allegiant Travel
Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Allegiant Travel. But the stock apears to be less risky and, when comparing its historical volatility, Sphere Entertainment Co is 1.26 times less risky than Allegiant Travel. The stock trades about -0.03 of its potential returns per unit of risk. The Allegiant Travel is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 4,851 in Allegiant Travel on September 24, 2024 and sell it today you would earn a total of 3,596 from holding Allegiant Travel or generate 74.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sphere Entertainment Co vs. Allegiant Travel
Performance |
Timeline |
Sphere Entertainment |
Allegiant Travel |
Sphere Entertainment and Allegiant Travel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sphere Entertainment and Allegiant Travel
The main advantage of trading using opposite Sphere Entertainment and Allegiant Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Allegiant Travel 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 Allegiant Travel will offset losses from the drop in Allegiant Travel's long position.Sphere Entertainment vs. Enel Chile SA | Sphere Entertainment vs. Luxfer Holdings PLC | Sphere Entertainment vs. Flexible Solutions International | Sphere Entertainment vs. Cheniere Energy Partners |
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Check out your portfolio center.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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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