Correlation Between Sphere Entertainment and Travelzoo

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

Diversification Opportunities for Sphere Entertainment and Travelzoo

0.77

Correlation Coefficient

Sphere Entertainment  Travelzoo

Poor diversification

The 3 months correlation between Sphere and Travelzoo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Travelzoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travelzoo 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 Travelzoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travelzoo has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Travelzoo go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Travelzoo

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 0.64 times more return on investment than Travelzoo. However, Sphere Entertainment Co is 1.56 times less risky than Travelzoo. It trades about -0.09 of its potential returns per unit of risk. Travelzoo is currently generating about -0.11 per unit of risk. If you would invest  4,015  in Sphere Entertainment Co on December 30, 2024 and sell it today you would lose (692.00) from holding Sphere Entertainment Co or give up 17.24% 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.  Travelzoo

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 unfluctuating 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.

Travelzoo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Travelzoo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sphere Entertainment and Travelzoo

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

The idea behind Sphere Entertainment Co and Travelzoo 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.