Correlation Between Sphere Entertainment and Bannix Acquisition

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

Diversification Opportunities for Sphere Entertainment and Bannix Acquisition

-0.34

Correlation Coefficient

Sphere Entertainment  Bannix Acquisition

Very good diversification

The 3 months correlation between Sphere and Bannix is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Bannix Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bannix Acquisition Corp 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 Bannix Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bannix Acquisition Corp has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Bannix Acquisition go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Bannix Acquisition

Given the investment horizon of 90 days Sphere Entertainment is expected to generate 7.14 times less return on investment than Bannix Acquisition. But when comparing it to its historical volatility, Sphere Entertainment Co is 12.86 times less risky than Bannix Acquisition. It trades about 0.25 of its potential returns per unit of risk. Bannix Acquisition Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2.56  in Bannix Acquisition Corp on October 25, 2024 and sell it today you would earn a total of  0.33  from holding Bannix Acquisition Corp or generate 12.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.78%
Values	Daily Returns

Sphere Entertainment Co  vs.  Bannix Acquisition Corp

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.

Bannix Acquisition Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bannix Acquisition Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Bannix Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sphere Entertainment and Bannix Acquisition

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

The idea behind Sphere Entertainment Co and Bannix Acquisition Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.