Correlation Between Sphere Entertainment and NETGEAR

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

Diversification Opportunities for Sphere Entertainment and NETGEAR

0.76

Correlation Coefficient

Sphere Entertainment  NETGEAR

Poor diversification

The 3 months correlation between Sphere and NETGEAR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and NETGEAR go up and down completely randomly.

Pair Corralation between Sphere Entertainment and NETGEAR

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the NETGEAR. In addition to that, Sphere Entertainment is 1.11 times more volatile than NETGEAR. It trades about -0.09 of its total potential returns per unit of risk. NETGEAR is currently generating about -0.06 per unit of volatility. If you would invest  2,769  in NETGEAR on December 28, 2024 and sell it today you would lose (297.00) from holding NETGEAR or give up 10.73% of portfolio value over 90 days.

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

Sphere Entertainment Co  vs.  NETGEAR

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 conflicting 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.

NETGEAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days NETGEAR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Sphere Entertainment and NETGEAR

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

The idea behind Sphere Entertainment Co and NETGEAR 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.