Correlation Between Sphere Entertainment and Primoris Services

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

Diversification Opportunities for Sphere Entertainment and Primoris Services

-0.03

Correlation Coefficient

Sphere Entertainment  Primoris Services

Good diversification

The 3 months correlation between Sphere and Primoris is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Primoris Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primoris Services 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 Primoris Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primoris Services has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Primoris Services go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Primoris Services

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Primoris Services. But the stock apears to be less risky and, when comparing its historical volatility, Sphere Entertainment Co is 1.26 times less risky than Primoris Services. The stock trades about -0.04 of its potential returns per unit of risk. The Primoris Services is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  6,097  in Primoris Services on October 25, 2024 and sell it today you would earn a total of  2,700  from holding Primoris Services or generate 44.28% 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.  Primoris Services

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 current stock price agitation, may contribute to short-term losses for the retail investors.

Primoris Services

Risk-Adjusted Performance

18 of 100

Solid

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

Pair Trading with Sphere Entertainment and Primoris Services

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

The idea behind Sphere Entertainment Co and Primoris Services 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.