Correlation Between Sphere Entertainment and Distoken Acquisition

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

Diversification Opportunities for Sphere Entertainment and Distoken Acquisition

0.45

Correlation Coefficient

Sphere Entertainment  Distoken Acquisition

Very weak diversification

The 3 months correlation between Sphere and Distoken is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Distoken Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Distoken Acquisition 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 Distoken Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Distoken Acquisition has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Distoken Acquisition go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Distoken Acquisition

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Distoken Acquisition. In addition to that, Sphere Entertainment is 2.61 times more volatile than Distoken Acquisition. It trades about -0.08 of its total potential returns per unit of risk. Distoken Acquisition is currently generating about -0.01 per unit of volatility. If you would invest  1,120  in Distoken Acquisition on December 29, 2024 and sell it today you would lose (9.00) from holding Distoken Acquisition or give up 0.8% of portfolio value over 90 days.

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

Sphere Entertainment Co  vs.  Distoken Acquisition

Sphere Entertainment

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Distoken Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Distoken Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Distoken Acquisition 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 Distoken Acquisition

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

The idea behind Sphere Entertainment Co and Distoken Acquisition 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..