Correlation Between Sphere Entertainment and BAKER

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

Diversification Opportunities for Sphere Entertainment and BAKER

0.1

Correlation Coefficient

Sphere Entertainment  BAKER

Average diversification

The 3 months correlation between Sphere and BAKER is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and BAKER HUGHES A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAKER HUGHES A 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 BAKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAKER HUGHES A has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and BAKER go up and down completely randomly.

Pair Corralation between Sphere Entertainment and BAKER

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 3.26 times more return on investment than BAKER. However, Sphere Entertainment is 3.26 times more volatile than BAKER HUGHES A. It trades about 0.28 of its potential returns per unit of risk. BAKER HUGHES A is currently generating about -0.25 per unit of risk. If you would invest  3,783  in Sphere Entertainment Co on October 22, 2024 and sell it today you would earn a total of  356.00  from holding Sphere Entertainment Co or generate 9.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Sphere Entertainment Co  vs.  BAKER HUGHES A

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.

BAKER HUGHES A

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sphere Entertainment and BAKER

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

The idea behind Sphere Entertainment Co and BAKER HUGHES A 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.