Correlation Between Sphere Entertainment and Aptiv PLC

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

Diversification Opportunities for Sphere Entertainment and Aptiv PLC

0.63

Correlation Coefficient

Sphere Entertainment  Aptiv PLC

Poor diversification

The 3 months correlation between Sphere and Aptiv is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC 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 Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Aptiv PLC go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Aptiv PLC

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Aptiv PLC. In addition to that, Sphere Entertainment is 1.41 times more volatile than Aptiv PLC. It trades about -0.1 of its total potential returns per unit of risk. Aptiv PLC is currently generating about 0.27 per unit of volatility. If you would invest  5,336  in Aptiv PLC on September 22, 2024 and sell it today you would earn a total of  550.00  from holding Aptiv PLC or generate 10.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Sphere Entertainment Co  vs.  Aptiv PLC

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 latest stock price agitation, may contribute to short-term losses for the retail investors.

Aptiv PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptiv PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Sphere Entertainment and Aptiv PLC

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

The idea behind Sphere Entertainment Co and Aptiv PLC 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 CEOs Directory module to screen CEOs from public companies around the world.