Correlation Between Sphere Entertainment and First Watch

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

Diversification Opportunities for Sphere Entertainment and First Watch

-0.54

Correlation Coefficient

Sphere Entertainment  First Watch

Excellent diversification

The 3 months correlation between Sphere and First is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and First Watch Restaurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Watch Restaurant 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 First Watch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Watch Restaurant has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and First Watch go up and down completely randomly.

Pair Corralation between Sphere Entertainment and First Watch

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 1.35 times more return on investment than First Watch. However, Sphere Entertainment is 1.35 times more volatile than First Watch Restaurant. It trades about 0.04 of its potential returns per unit of risk. First Watch Restaurant is currently generating about 0.02 per unit of risk. If you would invest  2,776  in Sphere Entertainment Co on October 3, 2024 and sell it today you would earn a total of  1,256  from holding Sphere Entertainment Co or generate 45.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Sphere Entertainment Co  vs.  First Watch Restaurant

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.

First Watch Restaurant

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Watch Restaurant are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, First Watch reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sphere Entertainment and First Watch

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

The idea behind Sphere Entertainment Co and First Watch Restaurant 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.