Correlation Between Sphere Entertainment and GMO Internet

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

Diversification Opportunities for Sphere Entertainment and GMO Internet

-0.62

Correlation Coefficient

Sphere Entertainment  GMO Internet

Excellent diversification

The 3 months correlation between Sphere and GMO is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet 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 GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and GMO Internet go up and down completely randomly.

Pair Corralation between Sphere Entertainment and GMO Internet

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the GMO Internet. In addition to that, Sphere Entertainment is 1.59 times more volatile than GMO Internet. It trades about -0.06 of its total potential returns per unit of risk. GMO Internet is currently generating about 0.18 per unit of volatility. If you would invest  1,741  in GMO Internet on December 19, 2024 and sell it today you would earn a total of  390.00  from holding GMO Internet or generate 22.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Sphere Entertainment Co  vs.  GMO Internet

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.

GMO Internet

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GMO Internet are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, GMO Internet reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sphere Entertainment and GMO Internet

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

The idea behind Sphere Entertainment Co and GMO Internet 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.