Correlation Between Sphere Entertainment and Crown

Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and Crown 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 Crown 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 Crown Cork 7375, you can compare the effects of market volatilities on Sphere Entertainment and Crown 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 Crown. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and Crown.

Diversification Opportunities for Sphere Entertainment and Crown

0.47

Correlation Coefficient

Sphere Entertainment  Crown

Very weak diversification

The 3 months correlation between Sphere and Crown is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Crown Cork 7375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Cork 7375 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 Crown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Cork 7375 has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and Crown go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Crown

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Crown. In addition to that, Sphere Entertainment is 6.2 times more volatile than Crown Cork 7375. It trades about -0.03 of its total potential returns per unit of risk. Crown Cork 7375 is currently generating about -0.05 per unit of volatility. If you would invest  10,482  in Crown Cork 7375 on October 7, 2024 and sell it today you would lose (144.00) from holding Crown Cork 7375 or give up 1.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Sphere Entertainment Co  vs.  Crown Cork 7375

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 latest stock price agitation, may contribute to short-term losses for the retail investors.

Crown Cork 7375

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Cork 7375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Crown is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sphere Entertainment and Crown

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

The idea behind Sphere Entertainment Co and Crown Cork 7375 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.