Correlation Between Sphere Entertainment and BrightSpring Health

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

Diversification Opportunities for Sphere Entertainment and BrightSpring Health

0.74

Correlation Coefficient

Sphere Entertainment  BrightSpring Health

Poor diversification

The 3 months correlation between Sphere and BrightSpring is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and BrightSpring Health Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightSpring Health 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 BrightSpring Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightSpring Health has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and BrightSpring Health go up and down completely randomly.

Pair Corralation between Sphere Entertainment and BrightSpring Health

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 0.94 times more return on investment than BrightSpring Health. However, Sphere Entertainment Co is 1.06 times less risky than BrightSpring Health. It trades about 0.08 of its potential returns per unit of risk. BrightSpring Health Services, is currently generating about 0.01 per unit of risk. If you would invest  3,958  in Sphere Entertainment Co on December 4, 2024 and sell it today you would earn a total of  405.00  from holding Sphere Entertainment Co or generate 10.23% return on investment over 90 days.

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

Sphere Entertainment Co  vs.  BrightSpring Health Services,

Sphere Entertainment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sphere Entertainment Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical indicators, Sphere Entertainment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

BrightSpring Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days BrightSpring Health Services, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, BrightSpring Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sphere Entertainment and BrightSpring Health

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

The idea behind Sphere Entertainment Co and BrightSpring Health 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..