Correlation Between Sphere Entertainment and Tigo Energy

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

Diversification Opportunities for Sphere Entertainment and Tigo Energy

0.79

Correlation Coefficient

Sphere Entertainment  Tigo Energy

Poor diversification

The 3 months correlation between Sphere and Tigo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo Energy 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 Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Tigo Energy go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Tigo Energy

Given the investment horizon of 90 days Sphere Entertainment is expected to generate 1.91 times less return on investment than Tigo Energy. But when comparing it to its historical volatility, Sphere Entertainment Co is 4.2 times less risky than Tigo Energy. It trades about 0.24 of its potential returns per unit of risk. Tigo Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Tigo Energy on October 25, 2024 and sell it today you would earn a total of  10.00  from holding Tigo Energy or generate 10.99% return on investment over 90 days.

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

Sphere Entertainment Co  vs.  Tigo Energy

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.

Tigo Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tigo Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Sphere Entertainment and Tigo Energy

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

The idea behind Sphere Entertainment Co and Tigo Energy 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.