Correlation Between Sphere Entertainment and 502413BE6

Can any of the company-specific risk be diversified away by investing in both Sphere Entertainment and 502413BE6 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 502413BE6 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 L3 TECHNOLOGIES INC, you can compare the effects of market volatilities on Sphere Entertainment and 502413BE6 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 502413BE6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere Entertainment and 502413BE6.

Diversification Opportunities for Sphere Entertainment and 502413BE6

-0.26

Correlation Coefficient

Sphere Entertainment  502413BE6

Very good diversification

The 3 months correlation between Sphere and 502413BE6 is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and L3 TECHNOLOGIES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3 TECHNOLOGIES INC 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 502413BE6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3 TECHNOLOGIES INC has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and 502413BE6 go up and down completely randomly.

Pair Corralation between Sphere Entertainment and 502413BE6

Given the investment horizon of 90 days Sphere Entertainment Co is expected to generate 1.75 times more return on investment than 502413BE6. However, Sphere Entertainment is 1.75 times more volatile than L3 TECHNOLOGIES INC. It trades about 0.05 of its potential returns per unit of risk. L3 TECHNOLOGIES INC is currently generating about 0.01 per unit of risk. If you would invest  2,418  in Sphere Entertainment Co on October 23, 2024 and sell it today you would earn a total of  1,771  from holding Sphere Entertainment Co or generate 73.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	20.0%
Values	Daily Returns

Sphere Entertainment Co  vs.  L3 TECHNOLOGIES INC

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

L3 TECHNOLOGIES INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L3 TECHNOLOGIES INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 502413BE6 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 502413BE6

The main advantage of trading using opposite Sphere Entertainment and 502413BE6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment position performs unexpectedly, 502413BE6 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 502413BE6 will offset losses from the drop in 502413BE6's long position.

The idea behind Sphere Entertainment Co and L3 TECHNOLOGIES INC 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.