Correlation Between Sphere Entertainment and Funko

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

Diversification Opportunities for Sphere Entertainment and Funko

0.08

Correlation Coefficient

Sphere Entertainment  Funko

Significant diversification

The 3 months correlation between Sphere and Funko is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc 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 Funko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Funko Inc has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Funko go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Funko

Given the investment horizon of 90 days Sphere Entertainment is expected to generate 2.73 times less return on investment than Funko. But when comparing it to its historical volatility, Sphere Entertainment Co is 1.04 times less risky than Funko. It trades about 0.1 of its potential returns per unit of risk. Funko Inc is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,182  in Funko Inc on October 5, 2024 and sell it today you would earn a total of  179.00  from holding Funko Inc or generate 15.14% return on investment over 90 days.

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

Sphere Entertainment Co  vs.  Funko Inc

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 fragile 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.

Funko Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, Funko may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sphere Entertainment and Funko

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

The idea behind Sphere Entertainment Co and Funko Inc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.