Correlation Between Sphere Entertainment and NBCUNIVERSAL

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

Diversification Opportunities for Sphere Entertainment and NBCUNIVERSAL

-0.14

Correlation Coefficient

Sphere Entertainment  NBCUNIVERSAL

Good diversification

The 3 months correlation between Sphere and NBCUNIVERSAL is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and NBCUNIVERSAL MEDIA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCUNIVERSAL MEDIA LLC has no effect on the direction of Sphere Entertainment i.e., Sphere Entertainment and NBCUNIVERSAL go up and down completely randomly.

Pair Corralation between Sphere Entertainment and NBCUNIVERSAL

Given the investment horizon of 90 days Sphere Entertainment is expected to generate 107.39 times less return on investment than NBCUNIVERSAL. But when comparing it to its historical volatility, Sphere Entertainment Co is 39.51 times less risky than NBCUNIVERSAL. It trades about 0.04 of its potential returns per unit of risk. NBCUNIVERSAL MEDIA LLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,804  in NBCUNIVERSAL MEDIA LLC on October 6, 2024 and sell it today you would lose (377.00) from holding NBCUNIVERSAL MEDIA LLC or give up 3.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.47%
Values	Daily Returns

Sphere Entertainment Co  vs.  NBCUNIVERSAL MEDIA LLC

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.

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NBCUNIVERSAL 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 NBCUNIVERSAL

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

The idea behind Sphere Entertainment Co and NBCUNIVERSAL MEDIA LLC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.