Correlation Between Sphere Entertainment and Ameriprise Financial

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

Diversification Opportunities for Sphere Entertainment and Ameriprise Financial

-0.54

Correlation Coefficient

Sphere Entertainment  Ameriprise Financial

Excellent diversification

The 3 months correlation between Sphere and Ameriprise is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise 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 Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Ameriprise Financial

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 2.03 times more return on investment than Ameriprise Financial. However, Sphere Entertainment is 2.03 times more volatile than Ameriprise Financial. It trades about 0.27 of its potential returns per unit of risk. Ameriprise Financial is currently generating about -0.15 per unit of risk. If you would invest  3,779  in Sphere Entertainment Co on October 8, 2024 and sell it today you would earn a total of  467.00  from holding Sphere Entertainment Co or generate 12.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Sphere Entertainment Co  vs.  Ameriprise Financial

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.

Ameriprise Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Ameriprise Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sphere Entertainment and Ameriprise Financial

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

The idea behind Sphere Entertainment Co and Ameriprise Financial 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.