Correlation Between Sphere Entertainment and Arconic

Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Arconic 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 Arconic 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 Arconic 59 percent, you can compare the effects of market volatilities on Sphere Entertainment and Arconic 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 Arconic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Arconic.

Diversification Opportunities for Sphere Entertainment and Arconic

0.26

Correlation Coefficient

Sphere Entertainment  Arconic

Modest diversification

The 3 months correlation between Sphere and Arconic is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Arconic 59 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arconic 59 percent 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 Arconic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arconic 59 percent has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Arconic go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Arconic

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Arconic. In addition to that, Sphere Entertainment is 9.92 times more volatile than Arconic 59 percent. It trades about -0.04 of its total potential returns per unit of risk. Arconic 59 percent is currently generating about -0.08 per unit of volatility. If you would invest  10,371  in Arconic 59 percent on September 12, 2024 and sell it today you would lose (148.00) from holding Arconic 59 percent or give up 1.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Sphere Entertainment Co  vs.  Arconic 59 percent

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 weak 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.

Arconic 59 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arconic 59 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Arconic is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sphere Entertainment and Arconic

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

The idea behind Sphere Entertainment Co and Arconic 59 percent 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.