Correlation Between Sphere Entertainment and Ubisoft Entertainment

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

Diversification Opportunities for Sphere Entertainment and Ubisoft Entertainment

0.45

Correlation Coefficient

Sphere Entertainment  Ubisoft Entertainment

Very weak diversification

The 3 months correlation between Sphere and Ubisoft is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Ubisoft Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubisoft Entertainment 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 Ubisoft Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubisoft Entertainment has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Ubisoft Entertainment go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Ubisoft Entertainment

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 0.71 times more return on investment than Ubisoft Entertainment. However, Sphere Entertainment Co is 1.4 times less risky than Ubisoft Entertainment. It trades about 0.0 of its potential returns per unit of risk. Ubisoft Entertainment is currently generating about -0.04 per unit of risk. If you would invest  4,381  in Sphere Entertainment Co on October 9, 2024 and sell it today you would lose (75.00) from holding Sphere Entertainment Co or give up 1.71% of portfolio value over 90 days.

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

Sphere Entertainment Co  vs.  Ubisoft Entertainment

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.

Ubisoft Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ubisoft Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Sphere Entertainment and Ubisoft Entertainment

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

The idea behind Sphere Entertainment Co and Ubisoft Entertainment 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.