Correlation Between Sphere Entertainment and Ituran Location

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

Diversification Opportunities for Sphere Entertainment and Ituran Location

-0.02

Correlation Coefficient

Sphere Entertainment  Ituran Location

Good diversification

The 3 months correlation between Sphere and Ituran is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Ituran Location and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ituran Location 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 Ituran Location. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ituran Location has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Ituran Location go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Ituran Location

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Ituran Location. But the stock apears to be less risky and, when comparing its historical volatility, Sphere Entertainment Co is 1.01 times less risky than Ituran Location. The stock trades about -0.07 of its potential returns per unit of risk. The Ituran Location and is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,008  in Ituran Location and on December 25, 2024 and sell it today you would earn a total of  758.00  from holding Ituran Location and or generate 25.2% return on investment over 90 days.

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

Sphere Entertainment Co  vs.  Ituran Location and

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 uncertain 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.

Ituran Location

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ituran Location and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Ituran Location displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sphere Entertainment and Ituran Location

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

The idea behind Sphere Entertainment Co and Ituran Location and 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.