Correlation Between Sphere Entertainment and Paya Holdings

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

Diversification Opportunities for Sphere Entertainment and Paya Holdings

-0.63

Correlation Coefficient

Sphere Entertainment  Paya Holdings

Excellent diversification

The 3 months correlation between Sphere and Paya is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Paya Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paya Holdings 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 Paya Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paya Holdings has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Paya Holdings go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Paya Holdings

If you would invest  974.00  in Paya Holdings on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Paya Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Sphere Entertainment Co  vs.  Paya Holdings

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.

Paya Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paya Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Paya Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sphere Entertainment and Paya Holdings

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

The idea behind Sphere Entertainment Co and Paya Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.