Correlation Between Sphere Entertainment and East Resources

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

Diversification Opportunities for Sphere Entertainment and East Resources

-0.52

Correlation Coefficient

Sphere Entertainment  East Resources

Excellent diversification

The 3 months correlation between Sphere and East is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and East Resources Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Resources Acqui 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 East Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Resources Acqui has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and East Resources go up and down completely randomly.

Pair Corralation between Sphere Entertainment and East Resources

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 1.2 times more return on investment than East Resources. However, Sphere Entertainment is 1.2 times more volatile than East Resources Acquisition. It trades about 0.05 of its potential returns per unit of risk. East Resources Acquisition is currently generating about 0.01 per unit of risk. If you would invest  2,148  in Sphere Entertainment Co on September 26, 2024 and sell it today you would earn a total of  1,635  from holding Sphere Entertainment Co or generate 76.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	25.0%
Values	Daily Returns

Sphere Entertainment Co  vs.  East Resources Acquisition

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 unsteady 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.

East Resources Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Resources Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, East Resources is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sphere Entertainment and East Resources

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

The idea behind Sphere Entertainment Co and East Resources 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.