Correlation Between Sphere Entertainment and Delta Air

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

Diversification Opportunities for Sphere Entertainment and Delta Air

-0.48

Correlation Coefficient

Sphere Entertainment  Delta Air

Very good diversification

The 3 months correlation between Sphere and Delta is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines 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 Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Delta Air go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Delta Air

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 1.67 times more return on investment than Delta Air. However, Sphere Entertainment is 1.67 times more volatile than Delta Air Lines. It trades about 0.05 of its potential returns per unit of risk. Delta Air Lines is currently generating about 0.07 per unit of risk. If you would invest  2,068  in Sphere Entertainment Co on September 19, 2024 and sell it today you would earn a total of  1,628  from holding Sphere Entertainment Co or generate 78.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sphere Entertainment Co  vs.  Delta Air Lines

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 latest uncertain performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Delta Air Lines

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta Air Lines are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Delta Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sphere Entertainment and Delta Air

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

The idea behind Sphere Entertainment Co and Delta Air Lines 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.