Correlation Between Sphere Entertainment and Lake Resources
Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Lake Resources 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 Lake Resources 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 Lake Resources NL, you can compare the effects of market volatilities on Sphere Entertainment and Lake Resources 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 Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Lake Resources.
Diversification Opportunities for Sphere Entertainment and Lake Resources
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sphere and Lake is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL 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 Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Lake Resources go up and down completely randomly.
Pair Corralation between Sphere Entertainment and Lake Resources
Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 0.38 times more return on investment than Lake Resources. However, Sphere Entertainment Co is 2.66 times less risky than Lake Resources. It trades about 0.05 of its potential returns per unit of risk. Lake Resources NL is currently generating about -0.01 per unit of risk. If you would invest 4,105 in Sphere Entertainment Co on December 1, 2024 and sell it today you would earn a total of 258.00 from holding Sphere Entertainment Co or generate 6.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
Sphere Entertainment Co vs. Lake Resources NL
Performance |
Timeline |
Sphere Entertainment |
Lake Resources NL |
Sphere Entertainment and Lake Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sphere Entertainment and Lake Resources
The main advantage of trading using opposite Sphere Entertainment and Lake Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, Lake Resources 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 Lake Resources will offset losses from the drop in Lake Resources' long position.Sphere Entertainment vs. PennyMac Mortgage Investment | Sphere Entertainment vs. United Natural Foods | Sphere Entertainment vs. Albertsons Companies | Sphere Entertainment vs. Alternative Investment |
Lake Resources vs. Albertsons Companies | Lake Resources vs. Smithfield Foods, Common | Lake Resources vs. NL Industries | Lake Resources vs. CF Industries Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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