Correlation Between Sphere Entertainment and Revolve Group

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

Diversification Opportunities for Sphere Entertainment and Revolve Group

-0.74

Correlation Coefficient

Sphere Entertainment  Revolve Group

Pay attention - limited upside

The 3 months correlation between Sphere and Revolve is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Revolve Group LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolve Group LLC 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 Revolve Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolve Group LLC has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Revolve Group go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Revolve Group

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 0.8 times more return on investment than Revolve Group. However, Sphere Entertainment Co is 1.25 times less risky than Revolve Group. It trades about -0.12 of its potential returns per unit of risk. Revolve Group LLC is currently generating about -0.2 per unit of risk. If you would invest  4,104  in Sphere Entertainment Co on September 27, 2024 and sell it today you would lose (262.00) from holding Sphere Entertainment Co or give up 6.38% of portfolio value over 90 days.

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

Sphere Entertainment Co  vs.  Revolve Group LLC

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 uncertain 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.

Revolve Group LLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Revolve Group LLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Revolve Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sphere Entertainment and Revolve Group

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

The idea behind Sphere Entertainment Co and Revolve Group LLC 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.