Correlation Between Sphere Entertainment and Lifevantage

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

Diversification Opportunities for Sphere Entertainment and Lifevantage

-0.44

Correlation Coefficient

Sphere Entertainment  Lifevantage

Very good diversification

The 3 months correlation between Sphere and Lifevantage is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage 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 Lifevantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifevantage has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Lifevantage go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Lifevantage

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Lifevantage. But the stock apears to be less risky and, when comparing its historical volatility, Sphere Entertainment Co is 1.61 times less risky than Lifevantage. The stock trades about -0.14 of its potential returns per unit of risk. The Lifevantage is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,364  in Lifevantage on September 17, 2024 and sell it today you would earn a total of  285.00  from holding Lifevantage or generate 20.89% return on investment over 90 days.

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

Sphere Entertainment Co  vs.  Lifevantage

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 relatively invariable technical indicators, Sphere Entertainment is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Lifevantage

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Lifevantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sphere Entertainment and Lifevantage

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

The idea behind Sphere Entertainment Co and Lifevantage 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.