Correlation Between Sphere Entertainment and JetBlue Airways

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

Diversification Opportunities for Sphere Entertainment and JetBlue Airways

-0.06

Correlation Coefficient

Sphere Entertainment  JetBlue Airways

Good diversification

The 3 months correlation between Sphere and JetBlue is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and JetBlue Airways Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JetBlue Airways Corp 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 JetBlue Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JetBlue Airways Corp has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and JetBlue Airways go up and down completely randomly.

Pair Corralation between Sphere Entertainment and JetBlue Airways

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 0.91 times more return on investment than JetBlue Airways. However, Sphere Entertainment Co is 1.09 times less risky than JetBlue Airways. It trades about 0.29 of its potential returns per unit of risk. JetBlue Airways Corp is currently generating about 0.11 per unit of risk. If you would invest  3,679  in Sphere Entertainment Co on October 20, 2024 and sell it today you would earn a total of  460.00  from holding Sphere Entertainment Co or generate 12.5% 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.  JetBlue Airways Corp

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 weak 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.

JetBlue Airways Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JetBlue Airways Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, JetBlue Airways may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sphere Entertainment and JetBlue Airways

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

The idea behind Sphere Entertainment Co and JetBlue Airways Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.